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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): September 24, 1997
MCLEODUSA INCORPORATED
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(Exact name of registrant as specified in its charter)
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Delaware 0-20763 42-1407240
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
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6400 C Street, S.W., P.O. Box 3177, Cedar Rapids, IA 52406-3177
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (319) 364-0000
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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ACQUISITION OF CONSOLIDATED COMMUNICATIONS INC.
On September 24, 1997, McLeodUSA Incorporated, a Delaware corporation
("McLeodUSA") acquired Consolidated Communications Inc., a privately held
Illinois corporation ("CCI"), through the merger (the "Merger") of CCI with and
into Eastside Acquisition Co. ("Acquiror Sub"), a newly formed wholly-owned
subsidiary of McLeodUSA. The Merger was effected pursuant to that certain
Agreement and Plan of Reorganization, dated as of June 14, 1997 among McLeodUSA,
Acquiror Sub and CCI (the "Reorganization Agreement").
CCI is a diversified telecommunications holding company which, as of
June 30, 1997, served telecommunications customers in 43 cities and towns
primarily in Illinois. CCI's wholly-owned subsidiary Illinois Consolidated
Telephone Company is an independent local exchange carrier with 37 central
office exchanges in east central Illinois serving approximately 89,000 access
lines as of August 22, 1997. CCI's wholly-owned subsidiary Consolidated Telecom
Services Inc. is a competitive local exchange carrier offering integrated local,
long distance and other telecommunications services in central and southern
Illinois, and in Indiana. CCI's wholly-owned subsidiary Consolidated
Communications Directories Inc. publishes and distributes approximately 370
annual "white page" and "yellow page" telephone directories in 38 states and the
United States Virgin Islands. CCI also operates an operator service company,
an inmate pay-phone company and a full service telemarketing agency. In
addition, CCI owns a majority interest in a cable television company serving
customers in Greene County, Illinois and Benton Harbor, Michigan, and owns a
minority interest in a cellular telephone partnership. Renamed "Consolidated
Communication Inc." pursuant to the Merger, Acquiror Sub will operate under
CCI's existing management and personnel will occupy CCI's existing facilities in
Mattoon, Illinois.
As a result of the Merger, all of CCI's issued and outstanding capital
stock immediately prior to the Merger was automatically converted into the right
to receive an aggregate of 8,488,596 shares of McLeodUSA's Class A common stock,
par value $.01 per share, and approximately $155 million in cash. Upon
consummation of the Merger, former CCI shareholders owned approximately 13.8% of
the outstanding common stock of McLeodUSA.
Pursuant to the Reorganization Agreement, Richard A. Lumpkin, the
Chairman and Chief Executive Officer of CCI and Robert J. Currey, the President
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and Chief Operating Officer of CCI, were appointed directors of McLeodUSA and
joined McLeodUSA's executive management team.
The foregoing description of the Merger does not purport to be
complete and is qualified in its entirety by reference to the Reorganization
Agreement, filed as Exhibit 2 hereto and incorporated herein by reference. A
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copy of the press release, dated September 24, 1997, issued by McLeodUSA
regarding the above-described transaction is attached as Exhibit 99 hereto.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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Certain of the financial statements and exhibits listed below are
incorporated by reference to financial statements and exhibits to previously
filed registration statements or reports of McLeodUSA filed with the Securities
and Exchange Commission (the "Commission") as indicated.
(a) Financial Statements of business acquired
Description
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Report of Independent Public Accountants (Incorporated herein by
reference to McLeodUSA's Form S-4, No. 333-34227, filed with the
Commission on August 22, 1997).
Consolidated Balance Sheets of CCI and subsidiaries at June 30,
1997, December 31, 1996 and December 31, 1995 (Incorporated herein
by reference to McLeodUSA's Form S-4, No. 333-34227, filed with the
Commission on August 22, 1997).
Consolidated Statements of Income of CCI and subsidiaries for the
six months ended June 30, 1997 and June 30, 1996 and for the years
ended December 31, 1996, 1995 and 1994 (Incorporated herein by
reference to McLeodUSA's Form S-4, No. 333-34227, filed with the
Commission on August 22, 1997).
Consolidated Statements of Changes in Stockholders' Equity of CCI
and subsidiaries for the six months ended June 30, 1997 and the
years ended December 31, 1996, 1995 and 1994 (Incorporated herein
by reference to McLeodUSA's Form S-4, No. 333-34227, filed with the
Commission on August 22, 1997).
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(a) Financial Statements of business acquired (cont'd)
Description
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Consolidated Statements of Cash Flows of CCI and subsidiaries for
the six months ended June 30, 1997 and June 30, 1996 and for the
years ended December 31, 1996, 1995 and 1994 (Incorporated herein
by reference to McLeodUSA's Form S-4, No. 333-34227, filed with the
Commission on August 22, 1997).
Notes to Consolidated Financial Statements of CCI and subsidiaries
(Incorporated herein by reference to McLeodUSA's Form S-4, No. 333-
34227, filed with the Commission on August 22, 1997).
(c) Exhibits.
2. Agreement and Plan of Reorganization dated as of June 14, 1997 by
and among McLeodUSA, Acquiror Sub and CCI (Filed as Exhibit 2.2
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to McLeodUSA's Current Report of Form 8-K, No. 0-20763, filed
with the Commission on June 26, 1997 and incorporated herein by
reference.)
99.1 Press Release, dated September 24, 1997, relating to McLeodUSA's
acquisition of CCI.
99.2 Report of Independent Public Accountants (Incorporated herein by
reference to McLeodUSA's Form S-4, No. 333-34227, filed with the
Commission on August 22, 1997).
99.3 Consolidated Balance Sheets of CCI and subsidiaries at June 30,
1997, December 31, 1996 and December 31, 1995 (Incorporated
herein by reference to McLeodUSA's Form S-4, No. 333-34227, filed
with the Commission on August 22, 1997).
99.4 Consolidated Statements of Income of CCI and subsidiaries for
the six months ended June 30, 1997 and June 30, 1996 and for the
years ended December 31, 1996, 1995 and 1994 (Incorporated herein
by reference to McLeodUSA's Form S-4, No. 333-34227, filed with
the Commission on August 22, 1997).
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(c) Exhibits (cont'd)
99.5 Consolidated Statements of Changes in Stockholders' Equity of
CCI and subsidiaries for the six months ended June 30, 1997 and
the years ended December 31, 1996, 1995 and 1994 (Incorporated
herein by reference to McLeodUSA's Form S-4, No. 333-34227, filed
with the Commission on August 22, 1997).
99.6 Consolidated Statements of Cash Flows of CCI and subsidiaries
for the six months ended June 30, 1997 and June 30, 1996 and for
the years ended December 31, 1996, 1995 and 1994 (Incorporated
herein by reference to McLeodUSA's Form S-4, No. 333-34227, filed
with the Commission on August 22, 1997).
99.7 Notes to Consolidated Financial Statements of CCI and
subsidiaries (Incorporated herein by reference to McLeodUSA's
Form S-4, No. 333-34227, filed with the Commission on August 22,
1997).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 7, 1997 McLEODUSA INCORPORATED
By: /s/ Stephen C. Gray
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Stephen C. Gray
President and Chief Operating
Officer
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EXHIBIT INDEX
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2. Agreement and Plan of Reorganization dated
as of June 14, 1997, by and among McLeodUSA,
Acquiror Sub and CCI (Filed as Exhibit 2.2
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to McLeodUSA's Current Report on Form 8-K, File No. 0-20763,
filed with the Commission on June 26, 1997 and
incorporated herein by reference.)
99.1 Press Release, dated September 24, 1997, relating
to McLeodUSA's acquisition of CCI.
99.2 Report of Independent Public Accountants
(Incorporated herein by reference to McLeodUSA's
Form S-4, No. 333-34227, filed with the Commission
on August 22, 1997).
99.3 Consolidated Balance Sheets of CCI and subsidiaries
at June 30, 1997, December 31, 1996 and December
31, 1995 (Incorporated herein by reference to
McLeodUSA's Form S-4, No. 333-34227, filed with
the Commission on August 22, 1997).
99.4 Consolidated Statements of Income of CCI and
subsidiaries for the six months ended June 30, 1997
and June 30, 1996 and for the years ended December
31, 1996, 1995 and 1994 (Incorporated herein by
reference to McLeodUSA's Form S-4, No. 333-34227,
filed with the Commission on August 22, 1997).
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EXHIBIT INDEX
Page Number in
Exhibit Number Exhibit Sequential Numbering System
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99.5 Consolidated Statements of Changes in
Stockholders' Equity of CCI and subsidiaries
for the six months ended June 30, 1997 and
the years ended December 31, 1996, 1995 and 1994
(Incorporated herein by reference to McLeodUSA's
Form S-4, No. 333-34227, filed with the Commission
on August 22, 1997).
99.6 Consolidated Statements of Cash Flows of CCI and
subsidiaries for the six months ended June 30, 1997
and June 30, 1996 and for the years ended December
31, 1996, 1995 and 1994 (Incorporated herein by
reference to McLeodUSA's Form S-4, No. 333-34227,
filed with the Commission on August 22, 1997).
99.7 Notes to Consolidated Financial Statements of CCI
and subsidiaries (Incorporated herein by reference
to McLeodUSA's Form S-4, No. 333-34227, filed with
the Commission on August 22, 1997).
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EXHIBIT 99
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[McLEODUSA INCORPORATED LOGO]
McLeodUSA Incorporated
6400 C Street SW
PO Box 3177
Cedar Rapids, IA 52406-3177
Press & Investor Contact: Bryce Nemitz
Phone: (319) 298-7800
FAX: (319) 298-7767
http://www.mcleodusa.com
FOR IMMEDIATE RELEASE
McLeodUSA/Consolidated Communications Merger Completed Creating
First Super Regional CLEC
CEDAR RAPIDS, IA AND MATTOON, IL - SEPTEMBER 24, 1997 - In a
transaction combining the capabilities of two fast-growing Midwestern
telecommunications firms, McLeodUSA Incorporated (Nasdaq NMS:MCLD) and
Consolidated Communications Inc. (CCI), have completed their previously
announced merger. Effective at 5:00 pm CDT today, the combined company will be
known as McLeodUSA Incorporated and will continue to focus on providing
integrated telecommunications services to business and residential customers in
the upper Midwest.
The former owners of CCI, a privately held company, will receive $155
million in cash and 8.49 million shares of McLeodUSA Class A Common Stock. The
stock value is $24.50 per share, the closing price on June 13, the final trading
day prior to the planned merger announcement. McLeodUSA will assume
approximately $60 million in long-term debt of CCI, bringing the total value of
the transaction to $420 million. Based on the annualized results of the quarter
ended June 30, 1997, the new company would have revenues of approximately $440
million and positive EBITDA of $6 million.
"We celebrate the completion of this transaction with Consolidated
Communications," said Clark McLeod, Chairman and CEO of McLeodUSA Incorporated.
"The combined management team is highly energized about being
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the first Super Regional Competitive Local Exchange Carrier, creating a 14-state
facilities-oriented telecommunications provider with 6 switches, and more than
207,000 local lines, 4,500 employees, 3,900 route miles of fiber optics network,
and publishing 12 million competitive phone directories a year. The parallel
strategic direction and common set of values shared by both companies promises
to create an exponentially more powerful company."
Dick Lumpkin, now Vice Chairman of McLeodUSA Incorporated, stated
"Speaking on behalf of the former CCI contingent of employees, we are excited
about this event. Today's merger will create growth opportunities that simply
would not have been possible as a private company, and our employees recognize
that fact. This is certainly the boldest move in the history of our 104-year
old company, and it is also the most exciting." Two subsidiaries of the former
CCI will retain their current names: Illinois Consolidated Telephone Company,
the independent local exchange carrier serving rural Central Illinois; and
Consolidated Communications Directories, a publisher of telephone directories in
39 states and the Virgin Islands.
As announced in June the McLeodUSA executive management team will
include:
. Clark McLeod, Chairman and CEO,
. Dick Lumpkin, Vice Chairman,
. Steve Gray, President and COO,
. Blake Fisher, Chief Financial and Administrative Officer
. Bob Currey, President of the Telecommunications subsidiary, and
. Art Christoffersen, President of the Publishing subsidiaries.
Dick Lumpkin and Bob Currey join the McLeodUSA Board of Directors.
Steve Gray, President and COO commented, "When we announced our
intention to merge just over three months ago, we noted the similarities in our
values and strategy. As we have combined and focused both organizations at all
levels, we have been delighted by the degree to which these similarities have
been confirmed. Both companies are growth-oriented, competitive and possess a
well-seasoned, energetic work force. We are confident that as 4,500 employees
move toward a set of common objectives and a nearly unlimited market
opportunity, we will create a truly powerful Midwestern presence in this
industry."
