Filed by: McLeodUSA Incorporated
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: CapRock Communications Corp.
Commission File No.: 000-24581
[The following is the text (including descriptions of graphics) of slides from a
slide show being presented by certain executive officers of McLeodUSA
Incorporated in meetings with analysts, potential investors and others regarding
its proposed business combination with CapRock Communications Corp.]
Slide 01
Large McLeodUSA logo and CapRock logo
Slide 02
Safe Harbor . . .
Some of the statements contained in this slide presentation discuss future
expectations, contain projections of results of operations or financial
condition or state other forward-looking information. Those statements are
subject to known and unknown risks, uncertainties and other factors that could
cause the actual results to differ materially from those contemplated by the
statements. The "forward-looking" information is based on various factors and
was derived using numerous assumptions. Actual events or results may differ
substantially. Important factors that could cause actual events or results of
McLeodUSA to be materially different from the forward-looking statements include
availability of financing and regulatory approvals, the number of potential
customers in a target market, the existence of strategic alliances or
relationships, developments in the industry, changes in the competitive climate
in which we operate and the emergence of future opportunities. These and other
applicable risks are summarized under the caption "Risk Factors" in the
McLeodUSA Annual Report on Form 10-K for the fiscal year ended December 31,
1999, which is filed with the Securities and Exchange Commission.
McLeodUSA and CapRock will file a proxy statement / prospectus and other
documents regarding the proposed business combination transaction referenced in
the following information with the SEC. Investors and security holders are urged
to read the proxy statement / prospectus, when it becomes available, because it
will contain important information. A definitive proxy statement / prospectus
will be sent to security holders of
CapRock seeking their approval of the transaction. In addition, McLeodUSA will
file a registration statement with the SEC to register certain of its notes to
be offered in an exchange offer for outstanding CapRock notes. CapRock
noteholders are urged to read the exchange offer prospectus, when it becomes
available, because it will contain important information. Investors and security
holders may obtain a free copy of the definitive proxy statement / prospectus,
exchange offer prospectus (when they are available) and other documents filed by
McLeodUSA and CapRock with the SEC at its web site at www.sec.gov. The
definitive proxy statement / prospectus, exchange offer prospectus and other
documents may also be obtained for free by directing a request to:
CapRock Communications, Inc. McLeodUSA
at 972-982-9550 at 319-790-7800.
Slide 03
A Solid Deal. . .
Consideration
Stock 15.1M Shares*
Fixed Exchange Ratio 0.3876 MCLD Shares
Debt (Net) $330M
Enterprise value $527M
Key Terms
No Cap or Collar
Voting Agreement (50% + shares)
Purchase Accounting
Expected Close - 1Q2001
*2% Fully Diluted
McLeodUSA logo ... assets and market
Slide 04
M & A, Staged, Successful . . .
[Merger and Acquisition timeline diagram, starting with the year 1996 continuing
until 2000 and showing corporate logos of business acquired or, in the case of
CapRock, proposed to be acquired. Telecom*USA Publishing Company is shown in
1996, Consolidated Communications is shown in 1997, Dakota Telecommunications
Group is shown in 1998, Ovation
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Communications is shown in 1999, Access is shown in 1999, Splitrock is shown in
2000, CapRock is shown in 2000.]
McLeodUSA logo ...integrating, leveraging people and assets
Slide 05
McLeodUSA and CapRock. . . .
[Below this text Local Business Lines, and on the left side of the slide appears
a map of the continental United States, showing the 48 states therein. The two
letter postal state abbreviation symbols "WA," "OR," "ID," "MT," "WY," "UT,"
"AZ," "NM," "CO," "KS," "NE," "SD," "ND," "MN," "WI," "IA," "MO," "IL," "IN,"
"OH," "MI," appear in bold type within the respective boundaries of the state
which each symbol represents and these states are colored yellow. The following
numerical percentages appear within the following states: Michigan "13%,"
Illinois "32%," Wisconsin "19%," Minnesota "23%," Iowa "46%," Missouri "8%",
Nebraska "5%," South Dakota "32%," North Dakota "33%," Wyoming "35%," Colorado
"17%," and Idaho "2%". A star and a numerical percentage associated therewith is
located in the state of Indiana "10%". The year "2000" appears within the
following states: Ohio, Kansas, New Mexico, Arizona, Utah, Oregon, Washington,
and Montana. The two letter postal state abbreviation symbols "TX", "OK", "AR",
"LA" appear in white letters within the respective boundaries of the state which
each symbol represents and these states are colored lavender.]
[Below the map on the left side appears a legend showing a star with the text
"Indianapolis, IN" to its right. Below the map on the left side appears text "%
Excludes Tier 1 Markets". Beside the map on the right side the following text is
listed with bullet points: Expands Footprint, 1st/2nd/3rd Tier, SME Focus.]
McLeodUSA logo . . . strategic fit
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Slide 06
Market Extension. . .
CPRK MCLD Total % Change
States 4 21 25 19%
Addressable POP's 27M 80M 107M 34%
Sales Cities 18 115 133 16%
Sales People 200 1,200 1,400 17%
Local Lines 83K 824K 907K 10%
Numbers Represent 2Q00 Actuals
McLeodUSA logo . . . tactical fit
Slide 07
Network Extension . . .
[Centered on the slide is a diagram of the continental United Sates. In yellow
print are lines illustrating McLeodUSA's fiber routes along with stars showing
future and current switch sites. In purple print are lines of CapRock's current
fiber route along with stars showing future and current switch sites. To the
bottom left of the diagram is a key designating a light star as a current switch
site and a dark green star designating a future switch site. To the right of the
diagram is a key for McLeodUSA designating a triangle for Core sites, a circle
for hub sites, a yellow line for fiber route*, and a triangle with a circle
around it for the network centers. Below is a key for CapRock listing a purple
line for fiber route. Below the key is the text "*Level 3 Fiber Complete
1H2001". Below this diagram is the text "Illustration Only". Above the diagram
is text "31,000 Route Miles".]
McLeodUSA logo . . . expands 1st, 2nd and 3rd tier markets
Slide 08
Combined Assets . . .
CPRK MCLD Total %Change
Route Miles 5K 26K/(1)/ 31K 19%
Fiber Miles 350K 815K 1.2M 50%
Colocations 200 400 600(2) 50%
Switches 12 37 49 32%
ATM's 17 361 378 5%
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Numbers Represent 2Q00 Actuals
1) Level 3 Fiber Complete 1H2001
2) Year-End 2000 Estimate
McLeodUSA logo . . . network fit
Slide 09
Financials . . .
As of 6-30-00 CPRK MCLD Total %Change
PP&E(Gross) $536M $2.2B $2.7B 23%
Market Value* $197M $10.9B $11.1B 2%
Debt (Gross) $360M $2.6B $3.0B 15%
*Fully Diluted Shares
2001 Est. CPRK MCLD Total %Change*
Revenue $200-$210M $1.9-2.0B $2.1-2.2B 60%
EBITDA $2M $225-235M $225-235M 340%
*MCLD 2000 Average Consensus vs. 2001 Expectations
McLeodUSA logo . . . are compelling
Slide 10
McLeodUSA and CapRock. . .
Right Assets
Right Management
Right Execution
Right Time
McLeodUSA logo . . .right combination
Slide 11
Large McLeodUSA logo
Small McLeodUSA logo
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