exchange carrier ("ILEC") business, acquired as part of its acquisition of Frontier Corporation last fall, to Citizens Communications (NYSE: CZN) for $3.65 billion in cash. Global Crossing and Citizens also entered into a strategic agreement under which Global Crossing will provide long distance services to the ILEC business.
Global Crossing ILEC, which, at year-end, comprised 1,070,000 access lines, is the 10th largest ILEC group in the United States.
Approximately half of these operations are in the Rochester, New York area, with the remainder in 13 states, including notably Minnesota,
Iowa, Wisconsin, and Pennsylvania. Adjusted for the long distance operations, 1999 revenues were approximately $ 805.2 million and 1999 EBITDA was approximately $ 386.8 million.
Citizens Communications is one of the fastest growing local exchange companies in the United States and, upon completion of the purchase of the Global Crossing unit, will have more than three million access lines in more than 22 states. The agreement is subject to both federal and state regulatory approvals which are expected to take approximately nine months to obtain.
"Global Crossing has committed itself to maximizing shareholder value," said Leo Hindery, Jr., Chief Executive Officer of Global Crossing. "This agreement delivers on that commitment to shareholders, streamlines our North American operations, and refines our global
focus on building and delivering services on the world's premier broadband network. Citizens Communications is the right buyer for
these assets. It serves the best interests of our customers and our communities to combine the strong results of our Frontier employees
with the team at Citizens, while realizing for our shareholders the full value of our ILEC business."
Added Hindery: "The sale of our incumbent local exchange business allows us to re-deploy some of our capital into our higher growth global network and services business. We intend to use these proceeds to pay down indebtedness and invest in our network and product capabilities."
The purchase price is subject to standard adjustments concerning closing date liabilities and working capital balances.
Chase Securities Inc. and Merrill Lynch & Co. assisted Global Crossing in the sale.