July 3, 2017 — Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) announced today it has completed its acquisition of FairPoint Communications, Inc. (NASDAQ: FRP), an all-stock transaction valued at approximately $1.3 billion including debt and based on present equity value. The merger further positions the company as a leading broadband and business service provider across a 24-state service area.

“Consolidated Communications’ mission is to turn technology into solutions, connecting people and enriching how they work and live,” said Bob Udell, president and chief executive officer of Consolidated Communications. “We know our customers’ needs are changing and this business combination creates a stronger company with greater scale and resources to serve our customers. We are excited to close on the acquisition and look forward to realizing the many benefits of this merger and leveraging our combined team’s expertise.”

Based on today’s transaction closing, under the terms of the agreement, FairPoint stockholders will receive a fixed exchange ratio of 0.7300 shares of Consolidated Communications common stock for each share of FairPoint common stock. No fractional shares of Consolidated Communications common stock will be issued. Each of FairPoint’s stockholders will be entitled to receive, in lieu of any fractional share of Consolidated Communications common stock, an amount in cash equal to the value of the fractional share of Consolidated Communications common stock to which such stockholder would otherwise have been entitled, less applicable taxes required to be withheld.

“The financial benefits associated with the combination in the form of cost savings and reduced financial leverage provide us additional operating and strategic flexibility going forward,” Udell said. “The transaction is meaningfully accretive to free cash flow per share in the first year and supports our current dividend policy to shareholders while making meaningful investments to enhance the network.”

Combined Company Facts and Strategic Benefits

Significant Fiber Network Expansion: The acquisition of FairPoint will add 22,000 fiber route miles to the Consolidated Communications fiber network, without any overlapping markets. The combined network spans 24 states and more than 36,000 fiber route miles, making Consolidated Communications the ninth largest fiber provider in the U.S. Consolidated Communication’s on-net buildings grow to 8,800 and fiber-connected towers total 2,600.

Enhanced Product and Services Portfolio: The company plans to expand its cloud services product suite to FairPoint markets, as well as other broadband enhancements. Overall, the combined company will eventually offer an even broader range of solutions, tools, and resources benefiting all customer groups.

Added Scale, Complementary Business Strategies: The merger combines two companies with complementary business strategies and provides a meaningful increase in scale to address the ever-changing competitive landscape.

On-Target Run-Rate Synergies: The transaction is expected to generate annual run rate cost savings of approximately $55 million, which are expected to be achieved within two years after completion of the merger. Consolidated has proven its ability to successfully integrate companies and meet or exceed synergy targets.

Stronger Financial Profile: Consolidated expects the transaction to be meaningfully accretive to free cash flow per share in the first year. The company will benefit from $300 million in net operating losses (NOLs) and it has refinanced FairPoint’s debt on very attractive terms. Additionally, the transaction will significantly improve the company’s balance sheet and capital structure and supports its current dividend policy to stockholders.

Experienced Team and Expertise: The combined team of approximately 4,400 employees will leverage best practices and greater resources to serve customers.

Dividend Practice
Consolidated Communications’ Board of Directors declared a quarterly dividend of $0.38738 per share consistently for 48 quarters since its initial public offering in 2005. The Consolidated Communications Board of Directors expects to maintain its annual dividend of $1.55 per share. The next quarterly dividend of $0.38738, which was declared on May 2, 2017, is payable on Aug. 1, 2017, to stockholders of record on July 15, 2017.

Management, Board and Headquarters
Bob Udell will continue to serve as president and chief executive officer and Steve Childers will serve as chief financial officer of the combined company. As part of the merger agreement, Consolidated has appointed Wayne Wilson, a New Hampshire resident who previously served on the FairPoint Board, to the Consolidated Communications Board at closing. The newly combined company will continue to be headquartered in Mattoon, Ill. and senior executives will be based throughout its service area.

Earnings and Guidance
Consolidated Communications will report second quarter 2017 earnings on Aug. 3, 2017. The company will discuss results and other developments for the combined company during the call and will update its annual guidance with its second quarter earnings report.

Press Release