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News Release
Vectren Corporation
P.O. Box 209
Evansville, IN 47702-0209
December 22, 2000
For Immediate Release
Vectren Corporation Announces Additional Investment with Utilicom Networks
Evansville - Vectren Corporation (NYSE:VVC), has invested an additional $8.1
million with Utilicom Networks, LLC and has also committed to invest up to $100
million with Utilicom Networks, pending completion of all funding. Utilicom
Networks, operating under the brand name TOTALink, is a provider of bundled
communications services, focusing on last mile delivery to residential and
commercial customers in Tier 2 and Tier 3 markets. It builds, owns and operates
high capacity broadband networks and delivers cable TV, high speed Internet
service and telephone service to customers in partnership with affiliates of
local electric and gas utilities.
Vectren is a current partner in Utilicom Networks' initial operation in
Evansville, Indiana, operating under the brand name of SIGECOM, LLC, a TOTALink
affiliate. Vectren's commitment will support Utilicom's plan to raise $600
million of additional capital to fund ventures in Indianapolis, Indiana and
Dayton, Ohio, where Utilicom has recently received authorization to build and
operate networks, and to recapitalize the SIGECOM venture. While Vectren
Corporation has committed to invest up to $100 million and management is
confident of the ability of our partners to raise the necessary funds, no
additional funding beyond the $8.1 will be made until all financing is secured.
In addition to Vectren, Utilicom has obtained $220 million of capital
commitments from Blackstone Capital Partners III, First Union Capital Partners,
and JP Morgan Capital, also subject to achieving full funding.
Both the Indianapolis and Dayton projects have received all necessary regulatory
approvals and are in advanced stages of pre-engineering and pre-construction
planning. Pole attachment rights have been secured and a launch date of late
2001 is expected. The Indianapolis project, TOTALink of Indiana LLC, will
consist of approximately 3,400 miles of broadband network passing 350,000 homes
and businesses. The Dayton project, TOTALink of Ohio LLC, will consist of
approximately 1,100 miles of broadband network passing 120,000 homes and
businesses.
Utilicom Networks' operation in Evansville, SIGECOM, serves over 22,000
customers on a network built in partnership with SIGCORP, Inc., formerly the
holding company of Southern Indiana Gas & Electric (SIGECO), a wholly owned
subsidiary of Vectren Corporation. Total network construction of 880 miles began
in October 1998 and was completed in June 2000. The network passes over 83,000
homes and businesses of which approximately 80% have had initial marketing. To
date, SIGECOM has approximately 54,800 Revenue Generating Units (RGUs)
consisting of cable television, high speed Internet and local and long distance
telephone. SIGECOM counts each of the four services as a separate RGU, offering
multiple services at varying discounts. SIGECOM is currently averaging 2.5 RGUs
per residential customer and 2.1 RGUs per commercial customer. Most recently,
SIGECOM has experienced penetration rates on homes marketed of 31% cable, 5%
high speed Internet, 23% local telephone and 22% long distance telephone
service. These penetration rates are in excess of expectations and industry
averages.
SIGECOM, L.L.C
Network Construction, Passings and Customer Information
12/31/99 6/30/00 11/30/00
-------- ------- --------
Total Activated Miles 360 880 880
Total Customers Passed 41,900 83,400 83,400
Total Customers Marketed 33,700 50,700 69,500
Customer Count*
Residential 8,100 15,500 21,400
Commercial 425 750 1,000
Customer Penetration Rate* 25% 32% 32%
Revenue Generating Units* 15,400 37,900 54,800
RGUs per Customer*
Residential 1.8 2.3 2.5
Commercial 1.7 2.1 2.1
Penetration Rates per RGU*
Cable 24% 31% 31%
High Speed Internet 2% 4% 5%
Local Telephone 9% 21% 23%
Long Distance 9% 20% 22%
* Customers, penetration rates and RGUs are based on customers marketed to
within constructed network only.
"This is a logical step in developing and maintaining customer relationships
supporting our core business," said Niel C. Ellerbrook, Vectren's Chairman and
Chief Executive Officer. "The concept of delivering high quality broadband
services and superior customer care is consistent with Vectren's objective of
being the leading regional provider of energy and related applied technology
solutions to business, residential and municipal customers. With SIGECOM
expected to be cash flow positive from operations in early 2001, we believe our
success in southern Indiana provides a model for future broadband investments in
the Tier 2 and 3 markets. SIGECOM's value is achieved by the delivery of
superior and competitively priced services to all customer classes from a known
and trusted company. We have worked hard to ensure that Vectren has established
firm footprints in Indianapolis, Dayton and the surrounding areas. With both
TOTALlink LLC's being marketed as affiliates of Vectren, we are confident that
our existing presence, coupled with the larger and more dense markets, provide
tremendous opportunity for success."
Vectren has a 14% equity interest in SIGECOM following the recapitalization of
Utilicom in January of this year. Vectren will have a 31% ownership in both the
Indianapolis and Dayton ventures and will own approximately 8% of Utilicom upon
completion of all new funding. With the $8.1 million investment, Vectren has now
invested $25 million with Utilicom as convertible subordinated debt and $8
million as equity in SIGECOM Holdings. Vectren does not expect the Indianapolis
and Dayton investments to have any significant financial impact on earnings in
2001 or 2002. Capital will be contributed to fund construction in Indianapolis
and Dayton over 5 years.
More about Vectren
Vectren Corporation (NYSE:VVC) is an energy holding company headquartered in
Evansville, Indiana. Through its regulated subsidiaries, Vectren offers gas
and/or electricity to nearly 1 million customers in adjoining service areas that
cover nearly two-thirds of Indiana and west central Ohio. Vectren's
non-regulated subsidiaries and affiliates currently offer energy-related
products and services, fiber-optic based communication services, and utility
related services including underground construction, line locating, meter
reading, materials management, and debt collections to customers throughout the
surrounding region.
To learn more about Vectren visit http://www.vectren.com.
More about Utilicom
Utilicom Networks Inc. offers a turnkey approach that enables deregulating
utilities serving second and third tier markets to provide their customers with
enhanced voice, data and video services. Utilicom builds and operates broadband
communications networks in conjunction with its utility partners, under the
TOTALink brand name. Utilicom's broadband connection provides customers access
to such services as digital telephony, high speed Internet access, video
conferencing, digital cable television, and advanced data networking services.
To learn more about Utilicom visit http://www.utilicomnetworks.com.
More about Blackstone
The Blackstone Group, a private investment bank with offices in New York and
London, was founded in 1985 by its Chairman, Peter G. Peterson, and its
President and CEO, Stephen A. Schwarzman. The firm has raised a total of
approximately $14 billion for alternative asset investing since its formation.
The Blackstone Group's six core businesses are Mergers and Acquisitions
Advisory, Restructuring and Reorganization Advisory, Private Equity Investing,
Private Real Estate Investing, Private Mezzanine Investing, and Liquid
Alternative Asset Management.
This news release may contain forward-looking statements concerning our
anticipation of future events that involve inherent risks and uncertainties. A
number of important factors which are difficult to predict and many of which are
beyond the control of the company could cause actual results to differ
materially from those in the forward-looking statements. Forward-looking
statements may be significantly impacted by certain risks and uncertainties,
including, but not limited to, economic or weather conditions affecting future
sales, changes in markets for energy services, changing energy market prices,
legislative and regulatory changes, including revised environmental
requirements, industry restructuring, availability and cost of capital and other
similar factors. SOURCE Vectren Corporation
Investor Contacts: Steven M. Schein, VP/Investor Relations, Vectren
(812) 491-4209, [email protected]
Media Contact: Jeffrey W. Whiteside, VP/Corporate Communications, Vectren
(812) 491-4205, [email protected]
Vectren Corporation, P.O. Box 209, Evansville, IN 47702-0209
