Mirroring the overall industry penchant for consolidation, CTC Communications and Choice One Communications two CLECs that have yet to complete their own merger said today they will jointly acquire Conversent Communications Inc.
The move creates an even stronger competitor to the incumbent local exchange carriers like Verizon and AT&T, explained Ray Allieri, president and CEO of CTC, adding the company will increase its emphasis on VoIP.
CTC and Choice One in February announced their merger, the terms of which were not disclosed. That combined entity, they said, would generate more than $550 million in annual revenue, and serve more than 100,000 customers via 1 million access line equivalents. The addition of Conversent brings those numbers to $800 million in annual revenue and more than 150,000 business customers, representing more than 1.3 million access lines, the companies said. Conversent owns facilities and customers in the Northeast, as well as in West Virginia.
The combined company, which has yet to be named, will be privately held and create the second-largest competitive communications provider in the United States. It mainly will focus on the Northeast, Mid-Atlantic and upper Midwest regions. The network will include 10,000 route miles of fiber and approximately 700 colocations.
The deal should close within 90-120 days, the companies said.
The acquisition will be partially funded with an equity investment from Columbia Ventures Corp. the sole shareholder of CTC Communications and a corresponding equity investment from existing Choice One shareholders or their affiliates. Camulos Capital LP and Värde Investment Partners LP have agreed to backstop the equity investment from the existing Choice One shareholders. Additionally, Goldman Sachs Credit Partners LP has committed to a fully underwritten senior secured credit facility to fund the balance of the acquisition and to refinance existing debt.
Conversent is headquartered in Charleston, W.Va. and Marlborough, Mass., while CTC is headquartered in Waltham, Mass. Choice One is headquartered in Rochester, N.Y.
The Choice One Board was advised by The Blackstone Group L.P.s Corporate Advisory Services team and Akin Gump Strauss Hauer & Feld LLP. The CTC Board was advised by Columbia Ventures Corporation and Kelley Drye & Warren LLP. Conversent was advised by Miller Buckfire & Co. LLC and Edwards Angell Palmer & Dodge LLP.
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May 24 2019 @ 15:22:08 UTC