EXHIBIT 99.2
Press Release
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW PO Box 3177
Cedar Rapids, IA 52406-1377
Press and Investor Contact: Bryce E. Nemitz
Phone: 319-790-7800
Fax: 319-298-7767
bnemitz@mcleodusa.com
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Web site: www.mcleodusa.com
Erskine Bowles, Former White House Chief of Staff and
General Partner at Forstmann Little, Will Join McLeodUSA
Board of Directors
Forstmann Little and McLeodUSA Conclude $1 Billion Investment
CEDAR RAPIDS, IOWA, September 15, 1999 -- McLeodUSA Incorporated
(Nasdaq/NMS: MCLD), one of the nation's fastest growing Integrated
Communications Providers (ICP), today announced that Erskine Bowles,
General Partner of Forstmann Little and former White House Chief of
Staff, will join the McLeodUSA Board of Directors.
As announced August 30, Forstmann Little agreed to invest $1 billion
in McLeodUSA in the form of convertible preferred stock with a
conversion price of $36.50 per share with a 3.5 percent coupon.
Under the terms of the agreement, Forstmann Little may convert to
common stock after five years and McLeodUSA may call the security
after seven years. The investment represents ownership of
approximately 12 percent of McLeodUSA fully diluted shares. The
transaction, completed today, includes two Board seats. Mr. Bowles
will be the second Forstmann Little addition to the McLeodUSA Board,
joining Theodore J. Forstmann, Senior Partner.
"The remarkable success Mr. Bowles has enjoyed in both the public
and private sectors over his impressive career provides evidence of
his entrepreneurial, financial and leadership skills," said Chairman
and Chief Executive Officer of McLeodUSA, Clark McLeod. "We look
forward to welcoming both of these prestigious leaders to our
Board."
As General Partner at Forstmann Little since January of this year,
Mr. Bowles focuses on the firms' existing portfolio companies and on
developing new investments for the firm. Mr. Bowles was involved in
the recent decision to invest $1 billion in McLeodUSA to fully fund
its current business plan. "One of the most compelling reasons for
selecting McLeodUSA for this substantial investment was the quality
of their leadership team and their track record of outstanding
execution. I look forward to seeing this very capable team in action
as Ted and I become involved in Board activities," stated Mr.
Bowles.
Erskine Bowles served as White House Chief of Staff from November
1996 until November 1998 for President Clinton. Previously, he was
Assistant to the President and Deputy Chief of Staff from October
1994 through December 1995. Before serving in the White House,
Bowles was Administrator of the U.S. Small Business Administration
from May 1993 through September 1994. In 1996, Bowles co-founded
Carousel Capital, a merchant banking firm active in the Southeast.
He remains affiliated with Carousel Capital. Before entering
government service in 1993, Bowles was Chairman and CEO of Bowles
Hollowell Conner & Co., a North Carolina investment banking firm he
founded in 1975.
In recognition of the long-term commitment and partnering
relationship the Forstmann Little investment represents, and because
of the intense interest both Theodore Forstmann and Clark McLeod
share in education, McLeodUSA also announced today plans to name its
employee training facilities "The Forstmann Little Center for
Excellence and Opportunity."
Salomon Smith Barney advised McLeodUSA, and Chase Securities Inc.
advised Forstmann Little on the transaction.
Founded in 1978, Forstmann Little is a private investment firm that
has invested over $13 billion in 24 acquisitions and significant
equity investments, including Gulfstream Aerospace, General
Instrument, Ziff-Davis Publishing, Yankee Candle Company and
Community Health Systems. The firm currently has approximately $3
billion in committed capital for future investments.
McLeodUSA is a provider of integrated communications services to
business and residential customers in 11 Midwest and Rocky Mountain
states; ten additional expansion states will be added. The Company
offers local, long distance, data, voice mail, paging, and Internet
access. McLeodUSA is a facilities-oriented communications provider
with 16 switches, 8,500 route miles of fiber optics network, 554,700
local lines, and 7,100 employees. In the next 12 months, the
Company's publishing subsidiaries plan to distribute over 22 million
copies of competitive directories in 22 states, expected to reach
over 36 million people.
Some of the statements contained in this news release 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. In some cases, you can identify
these so-called forward-looking statements by words like "may,"
"will, "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative
of those words and other comparable words. You should be aware that
those statements only reflect the predictions of McLeodUSA. Actual
events or results may differ substantially. Important factors that
could cause actual 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, technological, regulatory or other developments in
the industry, changes in the competitive climate in which McLeodUSA
operates 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, 1998, which is filed with the Securities and Exchange
Commission.
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