Explanatory Note
On May 18, 2000, CFW filed with the SEC under Rule 425 a presentation
relating to its proposed merger with R&B Communications, Inc. and its proposed
acquisition of PrimeCo PCS's operations in Virginia.
This new Rule 425 filing is being made to correct a typographical error
on page 19 of the May 18, 2000 425 Filing and serves to replace the May 18, 2000
filing in its entirety.
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[COVER PHOTO]
May 2000
CFW
Communications Company
<PAGE>
Forward-Looking Statements
This presentation contains forward-looking statements that are based upon the
company's estimates and expectations concerning future events and are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. These risks
and uncertainties include, among other things, future competitive and market
conditions, whether the Company's services gain customer acceptance, future
business decisions, and other factors, including those described in the
company's filings with the Securities and Exchange Commission, all of which are
difficult or impossible to predict accurately and many of which are beyond the
control of the Company. In light of the significant uncertainties inherent in
the forward-looking information herein, the inclusion of such information should
not be regarded as a representation by the company or any other person that the
Company's objectives or plans will be realized.
2
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<TABLE>
<S> <C>
[GRAPHIC]
Transaction Overview
Existing CFW Shareholders---- ------------Welsh, Carson, Anderson & Stowe and
59.3% Ownership, 13.1MM | | Morgan Stanley Dean Witter
Shares | | $100MM (WCAS) $100MM (WCAS)
| | 10.9% Ownership 10.0% Ownership
| | 2.4MM Shares 2.2MM Shares
| | $12.5MM (MSDW) $12.5MM (MSDW)
| | 1.4% Ownership 1.3% Ownership
| | 0.3MM Shares 0.3MM Shares
$375MM $325MM
Senior and Subordinated------->Post-transaction CFW------------>Senior Bank Debt
Notes
$407MM | | 16.6% Ownership
RSA 5 | | 3.7MM CFW Shares
RSA 6 | |
$20 MM | |
Lease Obligations | |
100% | | 100%
Richmond/Norfolk PCS--------- -----------R&B Communications
2.9 Million POPs ILEC - 12,000 Access Lines*
83% Covered CLEC - 4,000 Business Access Lines*
20 MHz Long Haul - 110.5 Route Miles
78,000 Digital Internet - 2,000 Subscribers*
Subscribers* 25.9% VA PCS Alliance
34.3% WVA PCS Alliance
*As of 12/31/99
</TABLE>
CFW
Communications Company 3
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Financing
o Fully Committed Equity
o $112.5MM Convertible Preferred at $41/share (8.5% coupon)
o Initial investment - issuance is not conditioned on the closing
of the Richmond/Norfolk PCS transaction
o $100MM Welsh Carson Anderson & Stowe (WCAS)
o $12.5MM Morgan Stanley Dean Witter (MSDW)
o $112.5MM Convertible Preferred at $45/share (5.5% coupon)
o Funding to occur at closing of the acquisition - terms subject to
shareholder approval
o $100MM WCAS
o $12.5MM MSDW
o Fully Committed Debt Financing
o $325MM Senior Bank Debt - commitment from MSDW
o $280MM of Bridge Senior Notes - commitment from MSDW
o $95MM Privately Placed Subordinated Notes - commitment from WCAS
CFW
Communications Company 4
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Pro Forma CFW
[CHART}
<TABLE>
Pre-Transaction Post-Transaction
- ---------------------------------------------------------------------------------- ---------------------------------------------
<S> <C>
CFW Richmond/ R&B Pro Forma CFW
Norfolk PCS
PCS PCS PCS PCS
- --- --- --- ---
o 1.6 Million Total POPs o 2.9 Million Total POPs o 26% of VA PCS o 8.3 Million Consolidated POPs
65% of VA PCS 100% o 34% of WV PCS o 7.6 Million Total Attributed POPs
o 2.2 Million Total POPs o 22% of Other PCS o 91% of VA PCS
45% of WV PCS o 79% of WV PCS
o 1.5 Million Total POPs ILEC o 100% of Richmond PCS
78% of Other Licenses ---- o 99% of Other Licenses
o 12,200 Access Lines
ILEC CLEC ILEC
- ---- ---- ----
o 38,000 Access Lines o 4,000 Access Lines o 50,200 Access Lines
CLEC Long Haul CLEC
- ---- --------- ----
o 5,800 Access Lines o 110.5 Route Miles o 9,800 Access Lines
Long Haul Spectrum Long Haul
- --------- -------- ---------
o Over 1,500 Route Miles by FYE 2000 o 100,000 MMDS o Over 1,500 Route Miles by FYE 2000
Households
o 1.65MM lol. LMDS POPs
o 29% Ownership of LMDS
Spectrum Spectrum
- -------- --------
o 750,000 MMDS Households Internet o 850,000 MMDS Households
o 6MM WCS POPs --------
o 1.65MM lol. LMDS POPs o 2,000 Subs o 6 MM WCS POPS
o 51% Ownership of LMDS o 1.3 MM total att. MDS POPS
Internet Internet
- -------- --------
45,200 subs o 47,200 Subs
To Be Divested To Be Divested
- -------------- --------------
o Cellular [to Bell Atlantic], o Towers [from Richmond], Directory Assistance
Towers Directory Assistance and and Investment in LSSI
Investments LSSI
</TABLE>
CFW
Communications Company 5
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CFW Overview
o Digital PCS
o Statewide coverage in Virginia(1) and West Virginia markets
o CDMA Technology
o 8.3 Million consolidated POPs in the Mid-Atlantic region; 7.6 Million
attributed POPs
o Additional growth opportunity
- Build out of 2 million PCS license POPs: parts of VA, WV, MD,
TN, PA
- Spectrum swaps
- Spectrum re-auction
o Approximately 125,000 pro forma subscribers as of December 31, 1999
o Wireless data offering
o Integrated Communications Provide (ICP)
o Leading Mid-Atlantic facilities based ICP
o Focused on high-growth communications sectors
- PCS: 8.3 million consolidated POPs
- CLEC: 9 markets in VA and WV
- Internet: ISP in 52 markets in VA, WV, Eastern TN and Western NC
o Leverage VA and WV fiber optic network
o Ability to leverage infrastructure, billing, and brand (strategic
enablers) for competitive advantage
(1) Excluding the Washington D.C. metropolitan area
CFW
Communications Company 6
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R&B Overview
o Partner in PCS Alliances - provides consolidation and control of PCS
Alliances
o Complements ICP expansion strategy
o Potential synergies include billing, network operations, sales,
engineering, and switching
o 100 year old ILEC company in proximity to CFW ILEC properties
o Revenues of $16.8MM for 1999
o EBITDA of $7.5MM for 1999
CFW
Communications Company 7
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Richmond/Norfolk PCS Overview
o Richmond/Petersburg BTA, Norfolk/Virginia Beach BTA -- 2.9
million population
o Customers -- approximately 78,000 (43,000 postpay; 35,000 prepay)
o Revenue: $50.5MM for 1999
o EBITDA: $(8.2)MM for 1999
o CDMA Technology Provider
o PCS Licenses -- B Block -- 20 MHz
o over 83% POPs covered
o 200 cell sites in service
CFW
Communications Company 8
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Richmond/ Norfolk PCS
Operating Strategy
o Recognize Synergies
o Enhanced statewide service offerings
o Leverage infrastructue costs over greater subscriber base
o Greater ability to penetrate market with larger footprint
o Network connectivity
o CAPEX Requirements
o Expansion of coverage footprint
o Extend service area to improve service and reduce churn
o Build capacity to accommodate wireless data
o Long-Term Bundling Opportunity
o Cross-marketing revenue synergies
CFW
Communications Company 9
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Dramatic Growth of Wireless Industry
o Growth from 3 sources
o Traditional Voice
o Wireline displacement
o Wireless data
o Wireless voice and data projected to grow 45% CAGR over next 5 years
[GRAPH PROVIDING PROJECTED WIRELESS INDUSTRY CAGR AND PENETRATION GROWTH
FOR NEXT FIVE YEARS]
Wireless MOU's in billions
Source: Consensus Wall Street Estimates
CFW
Communications Company 10
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Catalysts for Value Creation
<TABLE>
<S> <C>
o Richmond PCS o Geographic fit - completes VA & WV cluster
o Builds scale in PCS business
o Complements ICP Strategy
o R&B Communications o Provides control and consolidation of Alliances
o Complementary in-region business segments
o WCAS & MSDW o Patient growth capital
o Significant industry expertise
o Sale of Non-Core Assets o Enables management to focus time and attention
on core business
o Provides additional capital
o Monetizes undervalued assets
</TABLE>
CFW
Communications Company 11
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Combined Company Profile
o Service Areas
o Wireless
o Wireline
o Internet
o Fiber Network
o Operating Strategy
o Strategic Enablers
o Competition
o Financial Overview
o Management Team
CFW
Communications Company 13
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Overview of Service Footprint
[map]
Map of Pennsylvania, West Virginia, Virginia, Kentucky, North Carolina,
Maryland, New Jersey. Map shows: PCS, CLEC and Internet, Two Services, PCS,
ILEC and Richmond/Norfolk, PCS.
CFW
Communications Company 13
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Wireless
[map]
Map of Pennsylvania, New Jersey, Maryland, West Virginia, Virginia, Kentucky,
North Carolina, Tennessee. Map shows CFW/Alliances PCS (5.4MM pops), Richmond
PCS (2.9MMpops).
CFW
Communications Company 14
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Wireline
<TABLE>
<CAPTION>
CLEC ILEC Long-Haul
---- ---- ---------
<S> <C>
o Interconnection agreements o 50,2000 lines o Over 1,500 Route Miles by FYE 2000 throughout
in VA, WV and TN o Historical 3 1/2% access line growth Virginia and West Virginia
o 9,800 Business Lines o Historical 6-9% minutes
0 9 Markets o 100% digital platform
o 100% fiber interoffice
o Addressable Market (Current) -3 Lucent class 4/5 offices
-Uses Long Haul Fiber -STP
-Uses ILEC Switch o Leading VA service provider (per SCC)
</TABLE>
[map]
Map of Pennsylvania, West Virginia, Tennessee, New Jersey, Virginia, North
Carolina. Map shows CFW Wireline Service Markets
CFW
Communications Company 15
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Internet
Subscribers Equipment Local Broadband
- ----------- --------- ---------------
o 47,200 Dial-up o 16 DSLAM o Fiber
o End-to-End DSL o 4 Super-Pops o MMDS - 850 HH
o Web Hosting o 48 Local Access Points o LMDS - 1.7 MM pops
o 48 markets
[map]
Map shows CFW Internet Service Markets
CFW
Communications Company
16
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[MAP]
Map of Pennsylvania, New Jersey, Maryland, West Virginia, Virginia and
Tennessee. Map shows CFW Network (2Q00), Fiber Swap Under Negotiation (2Q00),
Planned (2000), and Connectivity through R and B
CFW
COMMUNICATIONS 17
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Operating Strategy
o Differentiated Target: small to mid-size businesses and consumers
o Local "home team": significant community presence and involvement
o Leading service provider in VA for last 10 years as measured by VA SCC
o Robust regional Digital PCS network-
o Over 550 cell sites operational
o Wholesale agreement with Sprint/Horizon (selected markets)
o Recognize synergies in Richmond/Norfolk PCS
o Leverage ICP infrastrucure
CFW
COMMUNICATIONS COMPANY 18
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Strategic Enablers
o Brand recognition and loyalty
o 41 Integrated Company retail outlets
o Integrated back office systems [Photo of store]
o Integrated customer care
o 1,500 fiber route miles by FYE 2000
CFW
COMMUNICATIONS COMPANY 19
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<TABLE>
<CAPTION>
Pro Forma Wireless Competition
1 2 3 4 5 6 7 8
Block MH Norfolk Richmond Roanoke Charleston Huntington Clarksburg Charlottesville Lynchburg
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cellular
- --------
A 25 ALLTEL ALLTEL US Cellular AT&T AT&T American US Cellular US Cellular
B 25 GTE GTE GTE ALLTEL ALLTEL US Cellular ALLTEL ALLTEL
PCS
- ---
A 30 Triton Triton Triton AT&T AT&T Sprint(3) Sprint(3) Triton
B 30 CFW PF CFW PF CFW CFW CFW VoiceStream (1) Triton CFW
C 30 NextWave(1)(2) NextWave(1)(2) NextWave(1)(2) PCSMob(1) OPM Auction(1) Polycell(1) CFW ABC Wireless(1)
D 10 Sprint Sprint Sprint(3) Sprint(3) Sprint(3) AT&T Devon(1) Sprint(3)
E 10 VoiceStream(1) VoiceStream(1) Devon Sprint Sprint(3) CFW VoiceStream(1) VoiceStream(1)
F 10 VoiceStream(1) VoiceStream(1) VoiceStream(1) MCG(1) NorthCoast(1) NorthCoast(1) VoiceStream(1) Devon(1)
</TABLE>
(1) Spectrum owned but not built out.
(2) NextWave's licenses have been cancelled by the FCC and are to be
re-auctioned in July 2000.
(3) CFW providing wireless access to Sprint under long-term contract.
CFW
COMMUNICATIONS COMPANY 20
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Financial Overview
o Pro Forma total assets in excess of $1.0 billion
o Pro Forma shareholder equity of approximately $500 million
o Fully committed debt financing of $700 million
o 1999 Revenues, as reported
o CFW: $73.8MM
o R&B: $16.8MM
o Richmond: $50.5MM
o VA PCS: $13.4MM
o WV PCS: $ 2.9MM
CFW
COMMUNICATIONS COMPANY 21
<PAGE>
Financial Overview
Combined Pro Forma Operating Statistics
<TABLE>
<CAPTION>
PCS REVENUE* SUBSCRIBERS CLEC REVENUE ACCESS LINES
- --------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C>
($000's)
1Q99 $14,620 87,100 1Q99 $ 601 2,500
2Q99 $16,006 98,000 2Q99 $ 884 4,900
3Q99 $16,538 106,200 3Q99 $1,170 7,100
4Q99 $19,055 122,000 4Q99 $1,458 9,800
ISP REVENUE SUBSCRIBERS ILEC REVENUE ACCESS LINES
- --------------------------------------- ---------------------------------------
($000's) ($000's)
1Q99 $ 502 11,900 1Q99 $10,227 47,900
2Q99 $ 764 18,100 2Q99 $10,652 48,200
3Q99 $ 1,552 33,300 3Q99 $10,457 48,900
4Q99 $ 2,793 47,300 4Q99 $10,448 50,200
*Virginia and West Virginia Alliances and Richmond PCS only.
</TABLE>
CFW
COMMUNICATIONS COMPANY 22
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Growth vs. Income Stock
Characteristics
Growth
- ------
o Newer industries and technologies
o Revenue growth > than GDP due to accelerating adoption
o Frequently associated with significant capital investment needs
o No dividends during periods of significant capital investment and
operating needs
o Shareholder returns from tax efficient capital gains
Income
- ------
o Mature industries
o Revenue growth ~ GDP growth
o Shareholder returns from a combination of dividends and typically more
limited capital gains
CFW
COMMUNICATIONS COMPANY 23
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CFW Stock Profile
o Will Eliminate Dividend
o Invest Capital in Potential High Growth Opportunities
[GRAPH COMPARING THE CFW STOCK PRICE AND THE DIVIDEND YIELD FOR PREVIOUS
THREE YEAR PERIOD.]
CFW
COMMUNICATIONS COMPANY 24
[GRAPH COMPARING THE CFW STOCK PRICE WITH QUARTERLY REVENEUS FOR PREVIOUS
THREE YEAR PERIOD].
<PAGE>
CFW Management Team
o James S. Quarforth (45), CEO
o CEO since 1990
o 20 years of industry experience
o Carl A. Rosberg (47), President and COO
o Formerly SVP of Operations, 1988-1999
o 15 years of industry experience
o CFO of Shenandoah Telecommunications, 1985-1988
o Michael B. Moneymaker (42), Senior Vice President and CFO
o CFO since 1995
o 20 years of financial management experience
o Ernst & Young, 1980-1995
CFW
COMMUNICATIONS COMPANY 25
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CFW Management Team
o Warren Catlett (40), Senior Vice President - Corporate Development
o 16 years of industry experience in Regulatory and Business Development
o 6 years with NECA (National Exchange Carrier Association), 1983-1989
o David Maccarelli (47), President - Virginia Operations
o 25 years of industry experience
o 18 years experience with Bell Atlantic in Operations and Engineering
o David Lowe (58), President - West Virginia Operations
o 30 years of industry experience
o Formerly President of Bell Atlantic - West Virginia
o Don Marie Persing (48), Senior Vice President
o 26 years of industry experience
o Formerly VP of Customer Service at PCS PrimeCo, Division level at AT&T
CFW
COMMUNICATIONS COMPANY 26
CFW Management Team
o Frank Berry, (36) Vice President - Engineering
o Employed by CFW since 1998
o Formerly a product manager/marketing for AT&T
o Duane Breeden, (35) Vice President - Information Technology
o Employed with CFW since 1999
o Formerly Executive Director-CFO for Advanced Services/Advanced Home Care
o Rob Cale, (41) Vice President - Marketing
o Employed with CFW since 1997
o Formerly Director of Marketing with Comdial Corporation
o David Coats, (44) Vice President - Customer Care
o Employed with CFW since 1998
o 19 years of management experience with Sprint
CFW Communications Company 27
<PAGE>
R&B Management Team
o J. Allen Layman (48), Chairman of the Board
o Former President and Chief Executive Officer of R&B Communications and
its subsidiaries
o Employed with R&B Telephone since 1974.
o Michael J. Layman (51), Vice President
o Former Senior Vice President of R&B Communications and its
subsidiaries
o Employed with R&B since 1985 and is a member of their Board of
Directors
o Charles Richardson (49), Vice President
o Former Senior Vice President of R&B Communications and its
subsidiaries
o Employed with R&B since 1975
o Vice President of Network Services in 1989 and Senior Vice President
CFW Communications Company 28
<PAGE>
R&B Management Team
o Christopher Foster (38), Vice President
o Former Vice President of R&B Communications and its subsidiaries
o Employed with R&B since 1984 and responsible for overseeing the
departments of Finance, Accounting, Human Resources and Purchasing.
o Thomas L. Orr (53), Vice President
o Former Vice President of Customer Services of R&B Communications and
its subsidiaries
o Employed with R&B since 1969.
CFW Communications Company 29
<PAGE>
Additional Growth Opportunities
o Build out 2 million of PCS licenses POPs
o Expand ICP (Digital PCS, CLEC, ISP) to New Markets
o Richmond
o Williamsburg
o Norfolk
o Virginia Beach
o Wireless Data/Internet
o Fixed Wireless Local Loop
o C-block Digital PCS Spectrum Re-Auction
CFW Communications Company 30
<PAGE>
ICP Expansion
o Expansion of ICP footprint to adjacent market
o Leverages strategic enablers - billing, customer care, etc.
o Adjacent CLEC and ISP
o Richmond
o Norfolk
o Tidewater region
o Outer Banks of NC
o Build economies of scale
CFW Communications Company 31
<PAGE>
Wireless Data / Internet
o Wireless data represents strong growth opportunity
o 100% digital build out provides early mover advantage through
capacity/platform
o Web Access Provider (WAP) technology implemented on Intelos systems
o CDMA Technology better suited for heavy bandwidth applications
o Synergies with ISP business
o Access
o Customers
o Billing
o Customer Service
CFW Communications Company 32
<PAGE>
July 2000 PCS Auction
Map of Virginia, West Virginia, Pennsyvannia, Delaware, and Maryland. Portions
of North Carolina, Tennessee, Kentucky, and Ohio. Map shows CFW Intelos, PCS
5.4M pops; Richmond PCS, 2.9MM pops; Licenses to be Auctioned
CFW Communications Company 33
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Summary
o Company transforming event
o Major digital PCS provider in Mid-Atlantic region
o ICP expansion opportunities
o Fully committed financing
o WCAS
o MSDW
CFW Communications Company 34
<PAGE>
Reg.M Legend
WE URGE INVESTORS AND SECURITY HOLDERS TO READ CFW'S REGISTRATION STATEMENT ON
FORM S-4 AND THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS RELATING TO THE MERGER TRANSACTION DESCRIBED ABOVE, WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN INFORMATION. When these and other documents
relating to the transaction are filed with the Commission, investors and
security holders may obtain a free copy at the Commission's web site at
www.sec.gov. The documents filed with the Commission by CFW may also be obtained
for free from CFW by directing a request to CFW Communications Company, P. O.
Box 1990, Waynesboro, Virginia 22980, Attn: Investor Relations, telephone: (540)
946-3500. Certain of these documents may also be available on CFW's website at
www.cfw.com or www.intelos.com. WHEN THEY BECOME AVAILABLE, READ THE DEFINITIVE
REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE
MAKING A DECISION CONCERNING THE MERGER.
CFW Communications Company 35
