EXHIBIT 99.1
Press Release
McLeodUSA Incorporated Access Communications, Inc.
McLeodUSA Technology Park 215 South State Street
6400 C Street SW PO Box 3177 PO Box 510830
Cedar Rapids, IA 52406-3177 Salt Lake City, UT 84151-0830
Press and Investor Contact: Bryce E. Nemitz Press Contact: Robert Hatch
Phone: 319-790-7800 Phone: 801-363-9600
Fax: 319-298-7767 Fax: 801-333-3606
bnemitz@mcleodusa.com roberth@accessld.com
Web Site: www.mcleodusa.com Web Site: www.accessld.com
McLeodUSA to Expand West
Addressable Market to Increase by 23 Percent
Planned acquisition of Access Long Distance seeds westward expansion;
McLeodUSA to receive proprietary routing technology
Cedar Rapids, Iowa and Salt Lake City, Utah June 1, 1999 Rapidly growing
Integrated Communications Provider (ICP) McLeodUSA Incorporated (Nasdaq
NMS:MCLD) announced today that it agreed to acquire Access Communications, Inc.
and SJ Investments, Inc. of Salt Lake City, Utah, which operate as Access Long
Distance. The combined company will be known as McLeodUSA Incorporated.
The owners of Access will receive approximately 1.9 million shares of 144(a)
unregistered McLeodUSA stock and about $50 million in cash. McLeodUSA will also
assume roughly $97 million in Access debt. Access has 323 employees and operates
in nine western states serving approximately 30,000 customers.
Market Area Expansion
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As a result of this agreement, McLeodUSA will add four new states to its current
16-state Midwest and Rocky Mountain ICP market area: Arizona, New Mexico, Oregon
and Washington, and provide total coverage of the US West geography. It will
increase the McLeodUSA addressable voice and data market by 23% and raise the
ten-year estimated market potential from $65 billion to over $80 billion. The
expansion accelerates the Company's total collocation plan to nearly 500 by
year-end 2000.
A Great Fit
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"Access is a perfect fit with the McLeodUSA acquisition strategy," said Steve
Gray, McLeodUSA President and COO. "First, the company aligns strategically and
operationally with McLeodUSA. The contiguous geography of Access and their high
penetration approach is aligned with ours. Second, team fit. Access will bring
to McLeodUSA over 300 people, highly competitive and well managed. And third, a
going, growing concern. Access will act as a seed for our western expansion and
provides leverage in two ways: leveraging the current customer base as we add
local and data products, and leveraging the current Access team to continue to
grow the entire operation."
Proprietary Routing Technology
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In addition to providing traditional long distance service, Access developed and
markets a proprietary Enhanced 800 Service to local and national accounts.
Simply stated, this technology allows the programming of incoming toll free
numbers to "behave" differently depending on where the call originates, the time
of day, caller entered digits, and other variables. Call routing also
incorporates voice messaging and database look-ups to allow the caller's
interaction to influence the specific routing outcome.
The capabilities of the software are unique and have already attracted a number
of nationally recognized companies to choose Access as their provider. Gray: "We
believe this is just the beginning for this exciting technology. Under the
McLeodUSA brand, we plan to continue pursuing this aspect of the national
business market. Within our market area, we will enhance our current product
capabilities allowing us to deepen the penetration in our markets. From a
futuristic perspective, the same logic built into the enhanced 800 routing
platform can be adapted to direct e-commerce applications. We believe this will
become essential as voice and data traffic converge."
Sales Strength
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Prior to this announcement, McLeodUSA projected doubling its sales force in 1999
from approximately 350 to 700. Access adds an additional 110 customer-focused
sales people to that total. Access President Scott Cate stated, "Our long-term
strategy has been to add local service and a more diverse product line to our
portfolio. This transaction allows us to carry out that strategy. Our sales
people will learn the McLeodUSA local service business yet this year, and be
ready to sell and support a full array of integrated products in 2000."
Cate added: "The entrepreneurial spirit that has guided Access since its
founding in 1985 parallels the spirit we see at McLeodUSA. The opportunity to be
the cornerstone for the westward expansion of McLeodUSA will create dramatic
opportunities for our employees, and our customers will benefit from an expanded
product offering."
"McLeodUSA management is recognized by telecom experts as one of the strongest
forces in our industry," added Clark McLeod, Chairman and CEO of McLeodUSA.
"Today, with the addition of Scott and his team, we will become even stronger.
The Access team is native to its
market areas in western states and has built enduring customer relationships in
their communities. The combined team will focus on providing superior service to
maintain low attrition, offering an integrated product for the best value
proposition, and serving as a single source providing simple, complete solutions
for our customers."
Anticipated Closing Date
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The parties expect to complete the transaction within 90 days, subject to Hart-
Scott-Rodino clearance and approval of regulatory authorities. The deal does not
require approval by McLeodUSA stockholders.
Company Descriptions
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A publicly traded firm headquartered in Cedar Rapids, Iowa, McLeodUSA is a
provider of integrated telecommunications services to business and residential
customers. Current customers are located in an eleven-state area that includes
Colorado, Iowa, Illinois, Indiana, Michigan, Minnesota, Missouri, North Dakota,
South Dakota, Wisconsin and Wyoming. Telecommunications products include local
and long distance service, Internet access, voice mail, paging, teleconferencing
and calling card services. McLeodUSA is a facilities-oriented communications
provider with 15 switches, 7,650 route miles of fiber optics network, 495,000
local lines, and 6,100 employees. McLeodUSA Publishing Company is one of the
largest independent publishers of yellow and white page telephone directories in
the country. In the next 12 months, McLeodUSA Publishing will distribute nearly
21 million copies of competitive directories in 22 states expected to reach 36
million people.
Access is a privately owned, facilities-based nationwide carrier headquartered
in Salt Lake City. Access was founded in 1985 by James R. Greenbaum, Jr., the
Company's chairman and CEO. Access provides voice and data long distance
services to 30,000 customers in 9 states.
The statements contained in this release are forward-looking statements that
involve risks and uncertainties, including, but not limited to revision of
expansion plans, 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
Company's business, changes in the competitive climate in which the Company
operates and the emergence of future opportunities, all of which could cause
actual results and experiences of McLeodUSA Incorporated to differ materially
from anticipated results and expectations expressed in the forward-looking
statements contained herein. These and other applicable risks are summarized
under the caption "Business-Risk Factors" and elsewhere in the Company's Annual
Report on Form 10-K for its fiscal year ended December 31, 1998, which is filed
with the Securities and Exchange Commission.
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