Country Road Enters into Stock Purchase Agreement with Otelco
August 7, 2008 –
Country Road Communications LLC has entered into a Stock Purchase
Agreement (the “Agreement”) with Otelco Inc. OTT (TSX:OTT.un). Country
Road is a leading provider of advanced telecommunications services to
communities located in Maine, Massachusetts and West Virginia. Pursuant
to the Agreement, Otelco will acquire 100% of the outstanding capital
stock of Pine Tree Holdings, Inc., Granby Holdings, Inc. and War
Holdings, Inc. from Country Road. The consideration for the purchase is
$101,329,000, payable in cash at closing, subject to adjustments as
provided in the Agreement. The acquisition of the Country Road
subsidiaries will add more than 23,000 Rural Local Exchange Carrier
(RLEC) voice and data access lines; 6,000 retail Competitive Local
Exchange Carrier (CLEC) voice and data access lines; and 82,000
wholesale CLEC connections.
Road is a great complement to our existing rural telephone and CLEC
operations in Maine and is an important step in our expansion in the
New England region,” said Mike Weaver, President and CEO of Otelco.
“Country Road’s commitment to providing excellent customer service and
delivering high quality telecommunications and Internet services to
residential and business customers is consistent with Otelco’s
commitment to its customers.
“From a strategic perspective, the
acquisition of Country Road adds attractive markets in New England and
strengthens our existing operations in the region. In addition, it
reaffirms to investors that we continue to pursue a disciplined
acquisition strategy, focusing on cash accretive opportunities. The
completion of this transaction will increase our free cash flow and
improve our payout ratio which will enhance our ability to maintain our
dividend while also creating additional excess cash flow to support our
growth,” added Weaver. “Country Road’s operations, which consist of
four RLECs and one CLEC, are similar to Otelco’s existing operations in
Maine and represent a well balanced business mix, with the revenue
stability provided by the RLECs and the attractive growth opportunities
provided by the CLEC,” noted Weaver.
the combination of Country Road’s infrastructure with the extensive
fiber network of our current Maine operation creates a more diverse and
robust network platform for our existing customers and provides
additional opportunities for expanding our services to new markets and
increasing our penetration in the markets we currently serve,” Weaver
Country Road Business Overview:
Country Road provides telecommunications services through the following subsidiaries:
- The operations of Pine Tree Telephone and Saco River Telephone
together form Country Road’s Maine RLEC cluster. Pine Tree’s franchise
area is comprised of approximately 120 square miles located 25 miles
from Portland, serving six towns from three exchanges in Gray, West
Gray and New Gloucester. Saco River’s franchise area is comprised of
approximately 110 square miles located approximately 17 miles from
Portland, serving seven towns from three exchanges in Bar Mills,
Waterboro and West Buxton.
- CRC Communications of Maine,
operating under the Pine Tree Networks brand, is a CLEC and provides
integrated communications services directly to small and medium
enterprises and, on a wholesale basis, to other multi-system operators
- Country Road’s Granby Holdings subsidiary operates as
an RLEC and is located approximately 12 miles from Springfield,
Massachusetts, serving the town of Granby (approximately 28 square
miles) from one exchange.
- Country Road’s War Telephone Company
subsidiary operates as an RLEC and is approximately 25 miles from
Bluefield, West Virginia, serving the town of War from one exchange.
of the proposed transaction is subject to customary closing conditions,
regulatory approvals and funding of the senior debt commitment. The
transaction has been approved by the Boards of Directors of both
companies and is expected to close in the fourth quarter of 2008.