ROCHESTER, NY – October 22, 2004 --Mpower Holding Corporation (AMEX:MPE), the parent company of Mpower Communications Corp. (“Mpower”), a leading provider of broadband Internet access and telephone services to business customers, today announced a definitive agreement to acquire Denver-based ICG Communications, Inc.’s customer base and certain network assets in California.
Under the terms of the agreement, Mpower will acquire ICG’s California retail and wholesale customers; a 1 ,412 route mile state-wide self-healing DWDM and SONET-based fiber ring connecting San Jose, San Francisco, Oakland, Sacramento, Stockton, Fresno, Bakersfield, San Diego, Anaheim and Los Angeles; 915 route miles of fully-survivable metropolitan SONET-based fiber rings in San Jose, San Francisco, Oakland, Sacramento, San Diego and Los Angeles which connect 128 commercial buildings, 33 of Mpower’s existing collocations and 11 ICG collocations that will be added to the Mpower footprint.
Mpower will purchase these assets for (i) $13.5 million in the form of 10,740,030 shares of Mpower Holding Corporation common stock and (ii) warrants to purchase another 2.0 million shares of common stock with a strike price of $1.383. These shares and warrants will be issued to ICG, a privately held company recently acquired by Columbia Capital and M/C Venture Partners. As a result of this transaction, Mpower Holding’s Board of Directors will be expanded by one seat. Mpower intends to assume certain of ICG’s capitalized leases in California, including its long-term leases for its fiber network. These capitalized leases have an approximate value of $24 million.
Mpower expects to fully integrate the ICG assets throughout 2005. The acquisition is expected to contribute in excess of $30 million in revenue and $8-$10 million of operating income (excluding expenses related to depreciation and amortization of the acquired assets) in 2006.
“In ICG, we have found a strategic transaction that transforms our business,” stated Mpower Chairman and Chief Executive Officer Rolla P. Huff. “The addition of ICG’s statewide SONET-based fiber network to our deep collocation and switching infrastructure affords us new products such as private line, accelerates our speed-to-market with IP Centrex capabilities, positions us as a strong player in the wholesale market, and reduces our reliance on the ILECs.”
“We have long said that we believe CLEC consolidation is necessary and that Mpower would be a leader in that effort in the West,” Huff added. “As a result of our disciplined approach, this acquisition puts Mpower in a leadership position in the California competitive telecommunications market, provides strong operating income and cash flow growth, presents additional value creation opportunities and preserves our strong cash position.”
Mpower assumes management control of the retail and wholesale California customer base and network assets immediately. Subject to regulatory approval, Mpower expects to close the acquisition before the end of this year. Throughout the closing process, there will be no impact to ICG customers’ service or support, and Mpower and ICG will work together to ensure a seamless transition of customers’ service and ongoing satisfaction. In addition, Mpower believes its expanded infrastructure will offer many benefits to customers in terms of service capabilities, reach, quality, reliability and value.
Columbia Capital and M/C Venture Partners Investment
In connection with the acquisition, Mpower also announced that telecom investment funds Columbia Capital and M/C Venture Partners, through their ownership of ICG, will invest $2.5 million in cash for 1,988,894 shares of Mpower Holding’s common stock.
Columbia Capital and M/C Venture Partners maintain significant holdings in the communications services sector and seek to invest in business models poised for long-term growth. “As an active investor in the telecommunications sector, we have looked at many different CLECs and a variety of business plans. We believe Mpower has the underlying network, business plan, tenured and savvy management team and financial strength to be the premier consolidation platform in the West,” commented John Siegel, a Partner at Columbia Capital. Conference Call to Discuss Third Quarter 2004 Results and ICG California Acquisition
Mpower will host a conference call to discuss the details of its third quarter 2004 financial and operating results in addition to the ICG California acquisition.
Date: Friday, October 29, 2004
Time: 10:00 a.m. (Eastern time)
Dial-in Number: 1-866-769-3706
Replay Number: 1-877-519-4471, PIN #5304643 - From Friday, October 29, 2004 at 1:00 p.m. Eastern through Thursday, November 4, 2004 at 5:00 p.m. Eastern
About Mpower Communications
Mpower Communications (AMEX:MPE) is the parent company of Mpower Communications, a leading facilities-based broadband communications provider offering a full range of data, telephony, Internet access and Web hosting services for small and medium-size business customers. Further information about the company can be found at www.mpowercom.com.
Forward-Looking Statements
Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Mpower cautions investors that certain statements contained in this press release that state our and/or management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Management wishes to caution the reader that these forward-looking statements are not historical facts and are only estimates or predictions. Actual results, including projections with respect to Mpower’s future operating performance and the revenues and operating income generated by the business acquired from ICG may differ materially from those projected as a result of risks and uncertainties including, but not limited to, our ability to retain ICG customers and to increase revenues from the acquired ICG business, our ability to effectively integrate the ICG business into our operations, unexpected costs of integrating the ICG business into our operations, future sales growth, changes in federal or state telecommunications regulations, market acceptance of our product and service offerings, the liquidity of our common stock, our ability to secure adequate financing or equity capital to fund our operations and network expansion, our ability to manage growth and maintain a high level of customer service, the performance of our network and equipment, our ability to enter into strategic alliances or transactions, the cooperation of incumbent local exchange carriers in provisioning lines and interconnecting our equipment, regulatory approval processes, the effect of regulatory decisions on our access charges and operating costs, changes in technology, price competition and other market conditions and risks detailed from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise.
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