[May 27, 2004] PAETEC Communications Will Acquire Selected Customers and Facilities of Covista ROCHESTER, N.Y. --(Business Wire)-- May 27, 2004 -- PAETEC Communications Inc., a communications solutions provider serving 27 markets nationwide, announced that it has signed a definitive agreement to purchase a significant base of commercial customers, switches, and related facilities of Covista Communications, Inc. (NASDAQ symbol: CVST). The transaction is expected to close during the third quarter of 2004 and is subject to, among other conditions, obtaining final regulatory approvals. "This agreement brings built-in strategic advantages," said Brad Bono, Chief Operating Officer for PAETEC. "It enhances our business model with the addition of a strong set of new customers that will strengthen our market-leading position in the medium-to-large commercial segment throughout the Northeast corridor, and it brings us opportunities to offer a full suite of facilites-based services to those customers. Our integration team is developing a plan to move quickly to achieve a smooth transition and bring together the best from both companies in terms of people, processes, and technology." Subject to final adjustment on closing, PAETEC will pay a cash amount based on a multiple of monthly operating revenue of approximately $2.7 million associated with the selected Covista customers, assets and facilities. Payment is due in three installments over an agreed-upon transition period, with the majority payable upon closing. In addition, PAETEC will assume leases for existing Covista switch facilities in New York and Philadelphia, as well as office locations in Bensalem, PA and Paramus, NJ. Covista will also execute a Wholesale Service Agreement to purchase $12 million of services from PAETEC over 24 months. The closing of the acquisition is expected to boost PAETEC's revenues, which were over $100 million during the first quarter of 2004. Bono added that the acquisition will enhance positive operating cash flow and bolster the more than $19 million in EBITDA that PAETEC generated in the first quarter. The acquisition is also expected to contribute at least $.05 per fully diluted share in net income for the company during 2005. About PAETEC Communications PAETEC Communications Inc. is a communications solutions provider offering broadband services, including advanced voice and video, enhanced data and communications management services to medium-sized and large businesses, colleges and universities, hospitals, hotels, governmental organizations and affinity groups. The company boasts one of the highest customer retention rates in the industry, and recently achieved the number two ranking on the Deloitte Fast 500 list of high technology companies in North America. Headquartered in Fairport, N.Y., PAETEC serves customers in 27 U.S. markets, including: Albany, Baltimore, Boston, Buffalo, Chicago, Connecticut, Fort Lauderdale, Long Island, Los Angeles, Miami, New Hampshire, New Jersey, New York City, Orlando, Orange County, Philadelphia, Pittsburgh, Rhode Island, Rochester, San Diego, Northern Virginia, Syracuse, Washington DC, and Western Massachusetts. PAETEC currently has over 1,050 employees. For further information, visit the PAETEC website at http://www.paetec.com. About Covista Covista is a facilities-based provider of telecommunications services with a substantial customer base, principally residential and small to medium sized businesses. Its products and services include a broad range of voice, data and Internet solutions, including long distance and toll-free services, local dial tone and features, calling cards, frame relay, Internet access, VPN, directory assistance and teleconferencing services. Covista currently owns and operates switches in Chattanooga, Dallas and Minneapolis, as well as in New York City and Philadelphia, which are to be sold to PAETEC. Covista operates Network Operation; call center and information technology facilities in Chattanooga to monitor its switched network and to coordinate its various services. For information on becoming a Covista customer, please telephone 800-805-1000 or visit the Company's website at www.covista.com. Statements in this news release regarding PAETEC's expected financial condition, revenues, operating cash flow, EBITDA, net income and other operating results, cost savings, operational efficiencies and other potential benefits of its proposed acquisition of the Covista assets and other planned events and expectations are forward-looking statements that involve risks and uncertainties. Actual future results or events may differ materially from these statements and are subject to various risks, including risks relating to the Company's business, operations and financial performance, the industry in which it operates, its ability to integrate acquired companies successfully, general economic and business conditions, competition, adverse changes in the regulatory or legislative environment, and various other factors beyond the Company's control. PAETEC expressly disclaims any obligation to update any forward-looking statements whether to reflect events or circumstances after the date of this news release or otherwise. [ Back To TMCnet.com's Homepage ]