UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 29, 1999
CENTURYTEL, INC.
(Exact name of registrant as specified in its charter)
Louisiana 1-7784 72-0651161
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
100 Century Park Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (318) 388-9000
Item 5. Other Events.
On June 29, 1999, the Registrant entered into a definitive agreement to purchase
from an affiliate of GTE Corporation ("GTE") assets comprising substantially all
of GTE's local telephone operations in Arkansas. In exchange, the Registrant has
agreed to pay $843.35 million in cash, subject to certain adjustments described
below.
The assets to be purchased will include all telephone access lines (which
numbered approximately 213,650 as of December 31, 1998) and related property and
equipment comprising GTE's local exchange operations in 103 exchanges in
predominantly rural and suburban markets throughout Arkansas, several of which
are adjacent to properties currently owned and operated by the Registrant. The
assets to be purchased will not include (i) GTE's Cellular, PCS, inter-LATA long
distance or internet operations, (ii) GTE's inter-LATA fiber optic network
assets or (iii) any rights under GTE's billing and collection contracts and
certain other agreements. The Registrant will not assume any liabilities of GTE
other than those associated with contracts, employees, customer deposits and
certain other assets transferred in connection with the sale. The purchase price
will be adjusted to, among other things, (i) reimburse GTE for certain
pre-closing costs and (ii) compensate the Registrant if GTE fails to attain
certain specified pre-closing capital expenditure targets. The aggregate effect
of these adjustments is not expected to be material.
Consummation of the transaction is subject to, among other things, (i) the
receipt of approvals from the Federal Communications Commission and the Arkansas
Public Utilities Commission, (ii) compliance with the notification and waiting
period requirements under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, (iii) the receipt of various third party consents, including releases from
GTE bondholders terminating liens on the transferred assets, and (iv) various
other customary closing conditions. The Registrant has agreed to pay GTE
approximately $42.2 million if the transaction is not consummated under certain
specified conditions, including its incapacity to finance the transaction.
Additional information regarding the acquisition is set forth in the
Registrant's press release announcing the transaction, which is filed as Exhibit
99.1 hereto and is incorporated in its entirety by reference herein.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CENTURYTEL, INC.
By: /S/ Neil A. Sweasy
-------------------------------
Neil A. Sweasy
Vice President and
Controller
Dated: July 9, 1999
Exhibit 99.1
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
June 29, 1999 Media: Patricia Cameron (318) 388-9674
[email protected]
Investors: Jeffrey S. Glover (318)388-9648
[email protected]
CenturyTel signs definitive agreement to purchase GTE's
local exchange properties in Arkansas
Monroe, LA. . .CenturyTel, Inc. (NYSE Symbol: CTL) signed a definitive asset
purchase agreement today to purchase GTE's local exchange assets in Arkansas. In
exchange, CenturyTel will pay GTE $843.35 million in cash, subject to certain
adjustments that are not expected to be material. The transaction is expected to
close in the first quarter 2000, pending regulatory approvals and certain other
closing conditions.
CenturyTel anticipates that at the time of closing these markets will encompass
230,000 access lines. In addition, CenturyTel expects these properties to
generate annualized revenues of approximately $165.3 million, and produce
annualized cash flow of nearly $92.5 million during the first year of operation.
"This acquisition represents another important step in executing our strategies
to geographically cluster our operations and to acquire properties that provide
opportunities for synergies and revenue growth," Glen F. Post, III, President
and CEO of CenturyTel, said. "These properties complement CenturyTel's existing
local telephone and wireless operations in the state, and will position us to
offer additional communications services to our customers."
Long-term financing plans are not yet complete and will be dependent upon
CenturyTel's review of its alternatives and market conditions. CenturyTel
currently expects to fund the purchase price initially through bank credit
facilities. Assuming that 50% of the purchase price is financed with convertible
debt securities and using current interest rates, CenturyTel believes the
acquisition will be one or two cents dilutive to 2000 earnings and accretive
thereafter.
The transaction will boost CenturyTel's access line ownership in Arkansas to
more than 275,000 lines as it becomes CenturyTel's second largest state in terms
of access lines served.
"CenturyTel has operated in Arkansas for more than 30 years, and this
transaction will allow us to further build upon our strong brand identity in the
state," Post said. "We believe our positive relationships with customers,
employees and regulators will benefit CenturyTel as we pursue the value-creating
opportunities brought about by this acquisition. The GTE properties serve some
excellent markets in the state, including Russellville, Jacksonville, Siloam
Springs and others, many of which are near thriving cities such as Little Rock,
Fayetteville, Bentonville and Fort Smith."
Customers will see no changes in their area codes, telephone numbers or local
calling areas. At this time, we anticipate that rates will remain the same as
GTE's current rates.
GTE employees who serve these areas will be offered positions with CenturyTel.
Additional employment opportunities will also be created to replace certain
functions currently handled by non-Arkansas GTE units.
In addition to historical information, this release includes certain
forward-looking statements that are subject to uncertainties that could cause
the Company's actual results to differ materially from such statements. Such
uncertainties include but are not limited to: changes in prevailing interest
rates or in the capital markets; the effects of ongoing deregulation in the
telecommunications industry; the effects of greater than anticipated competition
in the Company's markets; possible changes in the demand for the Company's
products and services; the Company's ability to successfully introduce new
offerings on a timely and cost-effective basis; the risks inherent in rapid
technological change; the Company's ability to effectively manage its growth,
including integrating newly acquired properties into the Company's operations;
the success and expense of the remediation efforts of the Company and its
vendors in achieving year 2000 compliance; any similar efforts, changes or other
factors impacting the GTE properties to be sold; and the effects of more general
factors such as changes in overall market or economic condition or in
legislation, regulation or public policy. These and other uncertainties related
to the Company's business are described in greater detail in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998. Any public
offering of convertible debt securities or other equity linked securities which
the Company may make in connection with the acquisition will be effected only by
means of a prospectus. This press release does not constitute an offer to sell
or the solicitation of an offer to purchase any such securities.
CenturyTel, Inc. provides integrated communications services including local
exchange, wireless, long distance, Internet access and security monitoring
services to more than two million customers in 21 states. The company,
headquartered in Monroe, La., is publicly traded on the New York Stock Exchange
under the symbol CTL. CenturyTel is the ninth largest local exchange telephone
company, based on access lines, and the 10th largest cellular company, based on
population equivalents owned, in the United States. Visit CenturyTel's corporate
website at (www.centurytel.com).
