TYPE: 425
SEQUENCE: 1
DESCRIPTION: COMPANY PRESS RELEASE
Filed by: NTELOS Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: NTELOS Inc.
Commission File No. 000-16751
NTELOS Inc. and Conestoga Enterprises, Inc.
Enter into Definitive Merger Agreement
Combination will Create Premiere Regional ICP
with 200,000 PCS Digital Subscribers &
175,000 Local Telephone Access Lines
NTELOS Receives $200 Million Financing Commitment
From Welsh, Carson, Anderson & Stowe
WAYNESBORO, VA AND BIRDSBORO, PA, JULY 25, 2001 - NTELOS Inc. (NASDAQ: NTLO) and
Conestoga Enterprises, Inc. (NASDAQ: CENI) announced today the signing of a
definitive merger agreement following a unanimous approval by both boards of
directors. The transaction creates a major integrated communications provider
(ICP) in the Mid-Atlantic region and, subject to regulatory and shareholder
approvals, is targeted to close around year-end 2001. At current levels, the
companies combined have more than $1.6 billion in assets, 550,000 customers and
annual run-rate revenues of over $300 million.
Conestoga is an integrated communications provider with a service area that
covers southern and central Pennsylvania and is contiguous to NTELOS' Virginia
and West Virginia operations. In addition, NTELOS owns several wireless PCS
licenses within the Conestoga service area. Conestoga provides local and
competitive local telephone services to 84,000 and 14,000 access lines,
respectively, throughout central Pennsylvania. For the year 2000, Conestoga's
ILEC operations generated $31 million of EBITDA. Additionally, Conestoga has
over 38,000 long distance customers, 18,000 wireless PCS subscribers, over 1,000
high-speed Internet customers, and 5,000 paging subscribers.
Conestoga shareholders will receive approximately $335 million, or $40 per
share. Also, approximately $73 million of Conestoga's debt will be assumed. The
transaction permits Conestoga shareholders to elect to receive up to 58% of the
merger consideration in cash and the remainder in NTELOS common stock. The
transaction will be a tax-free reorganization and will be accounted for as a
purchase. Conestoga shareholders will receive $40 per share as long as the
average share price of NTELOS common stock before the closing is between $18 and
$30. To the extent that this average is either above $30 or below $18 per share,
Conestoga shareholders will receive 1.33 or 2.22 shares of NTELOS stock,
respectively, for each Conestoga share for the stock component of the
consideration.
The closing prices for NTELOS Common Stock and Conestoga Common Stock on NASDAQ
were $24.00 and $31.75, respectively, on July 24, 2001 (the day prior to the
public announcement of the merger).
"This merger represents another important step as we execute our Mid-Atlantic
ICP strategy," said James S. Quarforth, CEO of NTELOS. "Last year we doubled the
size of our wireless operations and this transaction, as with the R&B merger
earlier this year, affirms our commitment to continued expansion of our core
wireline business segments. The combined company will have over 135,000 ILEC and
40,000 CLEC access lines and,
equally important, the Conestoga management team and organization will provide
an established base of operations for expansion in Pennsylvania."
"We are pleased to become a part of NTELOS," said Albert H. Kramer, president of
Conestoga who will lead the Pennsylvania operations of the combined company. "We
share their vision of building an integrated communications provider in the Mid-
Atlantic region and are pleased that our shareholders, customers and employees
will be able to continue to participate in the rural wireline and wireless
growth opportunities." Mr. Kramer will become Senior Vice President in charge of
NTELOS' Pennsylvania operations.
Kramer continued, "On April 27, 2001, we announced that we were exploring and
evaluating our strategic alternatives. Our affiliation with NTELOS is the
culmination of this process. Conestoga's Board unanimously approved the proposed
transaction as being in the best interests of its shareholders."
NTELOS will finance the cash portion of the merger by issuing up to $200 million
of a new Series E Redeemable, Convertible Preferred Stock to Welsh, Carson,
Anderson & Stowe (WCAS), an existing preferred shareholder. The Series E
Preferred Stock will have a $21.25 conversion price and provide an 8.5% coupon
rate, compounded semi-annually, and payable in kind at NTELOS' option. WCAS will
also receive one million warrants with a $21.25 per share strike price
representing a 5% premium over the 20-day average trading price at the time of
their commitment. Pursuant to the contractual terms of the existing Series B and
C Preferred Stock agreement, upon closing of the merger, the conversion price of
the Series B and C Preferred Stock will be reduced to a price not to exceed $34
per share. With this increased investment and ownership interest, WCAS will be
entitled, following the closing, to appoint four out of twelve members to the
NTELOS board of directors.
"Our $200 million commitment to NTELOS is a testament to our confidence in the
strategy and execution of the NTELOS management team," said Anthony J. de
Nicola, general partner of Welsh, Carson, Anderson & Stowe. "The successful
integration of both PrimeCo and R&B Communications gives us great confidence
that the integration of Conestoga will not only be seamless, but will offer
additional growth opportunities. In addition, this transaction allows the
company to significantly improve its capital structure and financial position by
adding over $30 million of EBITDA from the Conestoga ILEC operations."
NTELOS Inc. is an integrated communications provider with headquarters in
Waynesboro, Virginia. NTELOS provides products and services to customers in
Virginia, West Virginia, Kentucky, Tennessee and North Carolina, including
wireless digital PCS, dial-up Internet access, high-speed DSL (high-speed
Internet access), and local and long distance telephone services. Detailed
information about NTELOS is available online at www.ntelos.com. Welsh, Carson,
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Anderson & Stowe, a New York based private investment firm founded in 1979, has
organized 12 partnerships with total capital in excess of $12 billion. WCAS
focuses on investments in three industries: telecommunications, information
services, and healthcare. WCAS has other investments in the wireline and
wireless sectors, including Centennial Communications Corp., SpectraSite
Holdings, Inc., and Valor Telecommunications, LLC.
Conestoga Enterprises, Inc. is a Birdsboro, Pennsylvania based integrated
communications provider serving southern and central Pennsylvania. Through its
subsidiaries Conestoga provides local and long-distance telephone services,
wireless PCS, Internet access, paging, cable television and communications
equipment solutions. Detailed information about Conestoga Enterprises, Inc. is
available online at www.callconestoga.com.
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Legg Mason Wood Walker, Inc. advised Conestoga and Morgan Stanley advised
NTELOS.
Forward-looking statements made by the Companies are based on a number of
assumptions, estimates and projections. These statements are not guarantees of
future performance and involve risks and uncertainties, including those set
forth in reports filed by the Company with the Securities and Exchange
Commission, and any significant deviations from these assumptions could cause
actual results to differ materially from those in forward-looking statements.
The Company undertakes no obligation to revise or update such statements to
reflect current events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ NTELOS' REGISTRATION STATEMENT
ON FORM S-4 AND THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS RELATING TO THE MERGER TRANSACTION DESCRIBED ABOVE, WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. When these and other
documents relating to the transaction are filed with the Commission, investors
and security holders may obtain a free copy at the Commission's web site at
www.sec.gov. The documents filed with the Commission by NTELOS may also be
obtained for free from NTELOS by directing a request to NTELOS Inc., P. O. Box
1990, Waynesboro, Virginia 22980, Attn: Investor Relations, telephone: (540)
946-3500. Certain of these documents may also be available on NTELOS' website at
www.ntelos.com. WHEN THEY BECOME AVAILABLE, READ THE DEFINITIVE REGISTRATION
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Statement AND JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A
DECISION CONCERNING THE MERGER.
NOTICE:
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NTELOS will host a teleconference call today, July 25, 2001 at 10:30 AM EDT to
discuss the transaction. To participate in this call, please dial 800-553-0349.
For a taped replay, available through August 1, 2001, please dial 800-475-6701
and provide 597136.