MONROE, La.--(BUSINESS WIRE)--
CenturyTel, Inc. (NYSE: CTL):
-- Acquisition of 176,000 rural access lines with 99% broadband
coverage and 30% high speed Internet penetration
-- Accretive to free cash flow per share in the first year,
before synergies
-- Expands CenturyTel's access line base by 8%
-- Maintains CenturyTel's operational, financial and strategic
flexibility
-- Continued commitment to share repurchase plan
CenturyTel, Inc. ("CenturyTel" or the "Company") (NYSE: CTL)
announced today that it has entered into a definitive agreement to
acquire all of the outstanding stock of Madison River Communications
Corp. ("Madison River") for $830 million in a combination of cash and
the assumption of debt.
The acquisition is expected to close in the second quarter of
2007, subject to the satisfaction of certain customary conditions,
including necessary approvals from federal and state regulators. The
final purchase price is subject to certain customary adjustments which
are not expected to be material.
CenturyTel intends to finance the acquisition with debt and cash
generated from operations. The Company also expects to complete the
remainder of its current $1 billion share repurchase program by
mid-year 2007.
CenturyTel's balance sheet will remain strong following the
transaction, with a pro forma net debt to last twelve months ended
September 30, 2006 ("LTM") EBITDA ratio of approximately 2.6x, before
anticipated synergies. On a pro forma basis, the Company will have
approximately 2.3 million access lines and 390,000 high-speed Internet
subscribers.
Strategic Rationale
With this acquisition, CenturyTel adds attractive markets with
good demographics and growth prospects in Alabama, Georgia, Illinois
and North Carolina. Madison River's high-quality network is 99%
broadband-enabled and includes a 2,400 route mile fiber network that
is complementary to CenturyTel's existing operations.
Once this acquisition is fully integrated, CenturyTel estimates it
will achieve annual cost synergies of approximately $17 million.
"We are pleased to announce the acquisition of Madison River.
Under Stephen Vanderwoude's and Paul Sunu's leadership, Madison River
has built a great communications company. Through efficient investment
in their network and a grass-roots approach to their customer base,
they have achieved virtually ubiquitous broadband enablement and
strong high-speed Internet penetration," said Glen F. Post, III,
chairman and chief executive officer of CenturyTel. "This transaction
fits CenturyTel's acquisition strategy and permits us to continue our
share repurchase initiative while maintaining operational, financial
and strategic flexibility."
Financial Summary
Madison River generated $189 million of revenue, $99 million of
EBITDA and $35 million of leveraged free cash flow, before anticipated
synergies, in the twelve months ended September 30, 2006. The purchase
price represents 9.6x and 7.4x Madison River's LTM free cash flow
before and after anticipated synergies, respectively, and 8.4x and
7.2x LTM EBITDA before and after anticipated synergies, respectively.
CenturyTel estimates the transaction will be approximately 4%
accretive to free cash flow per share, before synergies. After
synergies, the transaction is estimated to be approximately 6%
accretive to free cash flow per share.
Additional Information
Lehman Brothers Inc. acted as exclusive financial advisor to
CenturyTel on the transaction. Goldman Sachs & Co. and Merrill Lynch &
Co. acted as financial advisors to Madison River.
This release includes certain non-GAAP financial measures.
Reconciliation of non-GAAP financial measures discussed above or that
may be discussed during the conference call described below will be
available in the Investor Relations portion of CenturyTel's Web site
at www.centurytel.com. Investors are urged to consider these non-GAAP
measures in addition to, and not in substitution for, measures
prepared in accordance with GAAP.
Conference Call Information
CenturyTel will host a conference call today at 9:30 a.m. Central
Time. Interested parties can access the call by dialing 866.847.7860.
A live, listen-only webcast will also be accessible through the
Investor Relations portion of CenturyTel's Web site at
http://www.centurytel.com.
If you are unable to participate during the live webcast, the call
will be archived on the Investor Relations portion of CenturyTel's Web
site through January 8, 2007. A replay of the conference call will be
accessible through December 27, 2006, by calling 888.266.2081 and
entering the access code: 1016606.
In addition to historical information, this release includes
certain forward-looking statements, estimates and projections that are
based on current expectations only, and are subject to a number of
risks, uncertainties and assumptions, many of which are beyond the
control of the Company. Actual events and results may differ
materially from those anticipated, estimated or projected if one or
more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect. Factors that could affect actual results
include but are not limited to: the Company's ability to effectively
manage its expansion opportunities, including its ability to integrate
Madison River's business into the Company's operations and systems, to
realize the synergies expected from this transaction, and to retain
and hire key personnel; higher than anticipated interest rates; the
inability to receive regulatory approvals related to this transaction
in a timely manner or at all; the timing, success and overall effects
of competition from a wide variety of competitive providers; the risks
inherent in rapid technological change; the effects of ongoing changes
in the regulation of the communications industry; the Company's
ability to effectively manage its expansion opportunities, including
retaining and hiring key personnel; possible changes in the demand
for, or pricing of, the Company's products and services; the Company's
ability to successfully introduce new product or service offerings on
a timely and cost-effective basis; the Company's ability to collect
its receivables from financially troubled communications companies;
the Company's ability to successfully negotiate collective bargaining
agreements on reasonable terms without work stoppages; the effect of
adverse weather; other risks referenced from time to time in the
Company's filings with the Securities and Exchange Commission (the
"SEC"); and the effects of more general factors such as changes in
interest rates, in tax rates, in accounting policies or practices, in
operating, medical or administrative costs, in general market, labor
or economic conditions, 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, 2005, as updated
by the Company's subsequent SEC reports. You should be aware that new
factors may emerge from time to time and it is not possible for
management to identify all such factors, nor can it predict the impact
of each such factor on the business or the extent to which any one or
more factors may cause actual results to differ from those reflected
in any forward-looking statements. You are further cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date of this release. The information contained in this
release is as of December 18, 2006. The Company undertakes no
obligation to update any of its forward-looking statements for any
reason.
About CenturyTel
CenturyTel (NYSE: CTL) is a leading provider of communications,
high-speed Internet and entertainment services in small-to-mid-size
cities through our broadband and fiber transport networks. Included in
the S&P 500 Index, CenturyTel delivers advanced communications with a
personal touch to customers in 25 states. Visit us at
www.centurytel.com.
About Madison River
Madison River operates established rural telephone companies
providing communications services to business and residential
customers in Alabama, Georgia, Illinois and North Carolina. Its
service offerings include local and long distance voice, high speed
broadband and dial-up Internet access services. As of September 30,
2006, Madison River served approximately 238,000 voice and broadband
connections. Madison River is owned by affiliates of Madison Dearborn
Partners Inc., Goldman, Sachs & Co., Providence Equity Partners and
others.
Source: CenturyTel, Inc.
Contact: CenturyTel Inc., Monroe
Media: Patricia Cameron, 318-388-9674
patricia.cameron@centurytel.com
or
Investors: Tony Davis, 318-388-9525
tony.davis@centurytel.com