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Exhibit 99.1
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For Immediate Release
Media Contact: Ythan Lax
Director, Corporate Communications
(716) 530-2944
[email protected]
Investor Contact: Lisa Schnorr
Director, Investor Relations
(716) 530-2965
[email protected]
Choice One completes merger with US Xchange; Company also secures $550 million
in new financing
Rochester, New York - August 1, 2000 -- Choice One Communications (Nasdaq:
CWON), an Integrated Communications Provider offering telecommunications
services to small and medium-sized businesses in the Northeast, today announced
that it has completed its merger with US Xchange, a facility-based CLEC
headquartered in Grand Rapids, Michigan.
On May 15, the two companies announced a definitive merger agreement to be paid
in both cash and Choice One common stock. In accordance with the agreement,
Choice One paid net cash in the amount of $303 million and issued 6.74 million
shares of new common stock (which includes approximately 500,000 shares issued
to new colleagues from US Xchange) subject to final balance sheet adjustments.
The merger is effective August 1, 2000 and will be accounted for as a purchase.
"This business combination creates tremendous incremental growth
opportunities," commented Steve Dubnik, chairman and CEO. "We moved quickly to
complete this transaction and that has allowed us to move ahead with our
expanded business plan and begin to realize the many benefits of this merger.
With a service footprint that will include 29 markets in 12 states, we are well
positioned to be the leading provider of voice and data communications in second
and third tier markets in the Northeast and Midwest." Dubnik noted that the
transaction closed only 11 weeks after the definitive agreement was announced.
Dubnik added, "We have established teams covering each operational area
affected by the integration. These teams have made substantial progress in
identifying priorities and have
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already begun the integration process. The highly compatible network
infrastructure and operational support systems will greatly facilitate this
process."
Integration Highlights
. The combined organization structure has been defined and communicated to all
Choice One and US Xchange colleagues. The new structure integrates colleagues
from both organizations and aligns them functionally.
. The 48 existing US Xchange collocations will be equipped with DSL
capabilities. The collocations with the greatest market penetrations will be
targeted first and are expected to be operational by the end of this year.
The company expects to have substantially all of the existing US Xchange
collocations equipped with DSL by the end of first quarter 2001.
. Applications have been filed or are in process for 44 new collocations in the
US Xchange markets. The company expects to substantially complete 55-60
additional collocations by the end of Q1 2001. These new collocations will be
fully equipped with voice and DSL capabilities.
. Project teams have been established to identify those applications and the
migration/integration strategy that will support one operational support
system (OSS) platform across the combined organization.
Additional Financing
Choice One also announced today that $550 million in new financing has been
finalized to fund the merger and continued expansion of the combined companies'
business plan. The new financing package consists of the following three
components:
. $200 million in Series A Senior Cumulative Preferred Stock; this was fully
funded at close.
. $200 million in additional senior secured credit; Choice One's $150 million
facility was replaced by a $350 million facility with similar terms and
conditions.
. $150 million senior unsecured bridge commitment ($180 million less $30
million in escrowed interest).
In connection with the preferred stock, the company issued warrants to purchase
1.75 million shares of Choice One common stock.
"Our ability to access capital is a strategic weapon that we are using to
further our growth," commented Dubnik. "With this financing in place, we now
have nearly $400 million available which fully funds our market expansion and
the rollout of DSL and web services throughout the soon-to-be expanded US
Xchange footprint."
About Choice One Communications
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Headquartered in Rochester, New York, Choice One Communications, Inc.
(Nasdaq: CWON) is a leading integrated communications services provider offering
voice and data services including Internet and DSL solutions, and web hosting
and design, primarily to small and medium-sized businesses in second and third-
tier markets.
Choice One currently provides or has announced plans to deploy services in
twelve states throughout the Northeast and Midwest, U.S. On August 1, Choice One
completed its merger with US Xchange, a facilities-based CLEC headquartered in
Grand Rapids, Michigan. On a pro forma basis, the combined companies reported
annualized first quarter revenue of more than $65 million and had 996 total
colleagues.
For further information about Choice One, visit our web site at
www.choiceonecom.com or contact us at 1-888-832-5800.
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Forward-Looking Statements
Certain statements contained in this press release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, and the company intends that such forward-looking statements be subject
to the safe harbors created thereby. The words "believes", "expects",
"estimates", "anticipates", "will be" and "plans" and similar words or
expressions identify forward-looking statements made by or on behalf of the
company. These forward-looking statements are subject to many uncertainties and
factors that may cause the actual results of the company to be materially
different from any future results expressed or implied by such forward-looking
statements. Examples of such uncertainties and factors include, but are not
limited to, availability of financing and regulatory approvals, the number of
potential customers in a target market, the existence of strategic alliances or
relationships, technological, regulatory or other developments in the company's
business, changes in the competitive climate in which the company operates and
the emergence of future opportunities, all of which could cause actual results
and experiences of Choice One to differ materially from anticipated results and
expectations expressed in the forward-looking statements contained herein.
These and other applicable risks are summarized under the caption "Risk Factors"
and elsewhere in the company's Registration Statement on Form S-1, Registration
No. 333-91321, filed with the Securities and Exchange Commission and declared
effective on February 16, 2000.
For further information about Choice One, visit our web site at
www.choiceonecom.com or contact us at 1-888-832-5800.
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