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More than 700,000 PCS Wireless Users and 270,000 Wholesale
Customers to Become Sprint Direct Subscribers
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Extends Company’s Direct Service Territory to an Additional 12.6
Million People
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Sprint Ends Plan to Divest iDEN Network Assets in Certain
Midwestern States Pending Transaction Close
OVERLAND PARK, Kan. & SCHAUMBURG, Ill.--(BUSINESS WIRE)--Oct. 19, 2009--
Sprint Nextel Corp. (NYSE: S) and iPCS, Inc. (NASDAQ: IPCS) today
announced an agreement for Sprint Nextel to acquire iPCS for
approximately $831 million, including the assumption of $405 million of
net debt. This transaction value represents 6.4x projected 2010 Adjusted
Earnings Before Income, Taxes, and Depreciation (“Adjusted EBITDA”*).
Sprint expects to achieve approximately $30 million of synergies
annually in the transaction and expects the transaction to be free cash
flow accretive to Sprint in 2010.
Under the terms of the agreement, Sprint Nextel will commence a cash
tender offer to acquire all of iPCS’ outstanding common shares for
$24.00 per share. This price per share represents a 34 percent premium
to iPCS’ closing stock price as of October 16, 2009. The agreement also
requires a minimum of a majority of the shares outstanding (on a
fully-diluted basis) to be tendered in the offer. Following completion
of the tender offer, any remaining shares of iPCS will be acquired in a
cash merger at the same price per share. Shareholders with approximately
9.5 percent of the outstanding common shares of iPCS have already agreed
to tender their shares pursuant to the tender offer and to vote their
shares in favor of the merger.
The acquisition is subject to customary regulatory approvals and other
customary closing conditions, and is expected to be completed either
late in the fourth quarter of 2009 or early 2010. As part of the
agreement, Sprint Nextel and iPCS will seek an immediate stay of all
pending litigation between the parties with a final resolution to become
effective upon closing of the acquisition.
As a result, Sprint will no longer be required to divest its iDEN
network in certain iPCS territories and will terminate its previously
announced divestiture process pending closing of the transaction.
iPCS’s services are sold under the Sprint brand name and in
Sprint-branded stores. Because of the nearly seamless marketing and
sales relationship between Sprint and iPCS, customers should not
experience any change in their service as a result of this transaction.
“Acquiring iPCS brings added value to Sprint by expanding our direct
customer base, growing our direct coverage area and simplifying our
business operations,” said Dan Hesse, CEO of Sprint Nextel. “Customers
in iPCS territory will see a seamless transition and continue to enjoy a
superb customer experience.”
“We are very pleased to have reached this agreement with Sprint Nextel.
Given the increasingly competitive landscape, we believe this is an
opportune time to provide our shareholders with a liquidity event at a
very attractive price. iPCS shareholders will receive a significant and
immediate premium for their shares and our customers will continue to
receive the same excellent service from the same dedicated people who
provide that service today,” said Timothy M. Yager, president and CEO of
iPCS. “We look forward to working with the Sprint Nextel team to ensure
a smooth completion of the transaction and transition in the coming
months.”
*Financial Measures
Certain financial measures included in this release have been generated
using adjustments to amounts determined under generally accepted
accounting principles (non-GAAP). The non-GAAP financial measures
reflect industry conventions, or standard measures of liquidity,
profitability or performance commonly used by the investment community
for comparability purposes. The financial measures used in this release
include the following:
Adjusted EBITDA is defined as operating income plus depreciation,
amortization and special items. We believe that Adjusted EBITDA provides
useful information to investors because it is an indicator of the
strength and performance of ongoing business operations. While
depreciation and amortization are considered operating costs under
generally accepted accounting principles, these expenses primarily
represent non-cash current period allocation of costs associated with
long-lived assets acquired or constructed in prior periods.
Net Debt is debt, including current maturities, less cash and
equivalents and current marketable securities.
ADVISORS
Sprint’s financial advisor for the transaction was Citigroup Global
Markets Inc. and its principal legal advisor was King & Spalding LLP.
iPCS’s financial advisors were UBS Investment Bank and Morgan Stanley &
Co. Incorporated and its principal legal advisor was Mayer Brown LLP.
NOTICE TO INVESTORS
The planned tender offer described in this release has not yet
commenced. The description contained in this release is not an offer to
buy or the solicitation of an offer to sell securities. At the time the
planned tender offer is commenced, Sprint Nextel will file a tender
offer statement on Schedule TO with the Securities and Exchange
Commission (the “SEC”), and iPCS will file a solicitation/recommendation
statement on Schedule 14D-9 with respect to the planned tender offer.
The tender offer statement (including an offer to purchase, a related
letter of transmittal and other tender offer documents) and the
solicitation/recommendation statement will contain important information
that should be read carefully before making any decision to tender
securities in the planned tender offer. Those materials will be made
available to iPCS's stockholders at no expense to them. In addition, all
of those materials (and all other tender offer documents filed with the
SEC) will be made available at no charge on the SEC’s website at www.sec.gov.
SAFE HARBOR
This press release includes forward-looking statements regarding the
proposed acquisition and related transactions that are not historical or
current facts and deal with potential future circumstances and
developments, in particular, information regarding the acquisition of
iPCS. Forward-looking statements are qualified by the inherent risk and
uncertainties surrounding future expectations generally and may
materially differ from actual future experience. Risks and uncertainties
that could affect forward-looking statements include: the failure to
realize synergies as a result of operational efficiencies, unexpected
costs or liabilities, the result of the review of the proposed
transaction by various regulatory agencies and any conditions imposed in
connection with the consummation of the transaction, satisfaction of
various other conditions to the closing of the transaction contemplated
by the transaction agreement and the risks that are described from time
to time in Sprint’s and iPCS’s respective reports filed with the
Securities and Exchange Commission (SEC), including the annual report on
Form 10-K for the year ended December 31, 2008 and quarterly report on
Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009 of
each of Sprint and iPCS. This press release speaks only as of its date,
and Sprint and iPCS disclaim any duty to update the information herein.
ABOUT iPCS, Inc.
iPCS, through its operating subsidiaries, is a Sprint PCS Affiliate of
Sprint Nextel Corporation with the exclusive right to sell wireless
mobility communications network products and services under the Sprint
brand in 81 markets including markets in Illinois, Michigan,
Pennsylvania, Indiana, Iowa, Ohio and Tennessee. The territory includes
key markets such as Grand Rapids (MI), Fort Wayne (IN), the Tri-Cities
region of Tennessee (Johnson City, Kingsport and Bristol), Scranton
(PA), Saginaw-Bay City (MI), Central Illinois (Peoria, Springfield,
Decatur, and Champaign) and the Quad Cities region of Illinois and Iowa
(Bettendorf and Davenport, IA, and Moline and Rock Island, IL). As of
June 30, 2009, iPCS's licensed territory had a total population of
approximately 15.1 million residents, of which its wireless network
covered approximately 12.6 million residents, and iPCS had approximately
710,200 subscribers. iPCS is headquartered in Schaumburg, Illinois. For
more information, please visit iPCS's website at www.ipcswirelessinc.com.
ABOUT SPRINT NEXTEL
Sprint Nextel offers a comprehensive range of wireless and wireline
communications services bringing the freedom of mobility to consumers,
businesses and government users. Sprint Nextel is widely recognized for
developing, engineering and deploying innovative technologies, including
two wireless networks serving almost 49 million customers at the end of
the second quarter of 2009; industry-leading mobile data services;
instant national and international push-to-talk capabilities; and a
global Tier 1 Internet backbone. The company’s customer-focused strategy
has led to improved first call resolution and customer care satisfaction
scores. For more information, visit www.sprint.com.
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6076161&lang=en
Source: Sprint Nextel Corp. and iPCS, Inc.
Sprint Nextel Media Contact:
Scott Sloat, 240-855-0164
Scott.sloat@sprint.com
or
Sprint
Nextel Investor Relations Contact:
Yijing Brentano, 800-259-3755
Investor.relations@sprint.com
or
iPCS
Public Relations Contact:
Joele Frank, Wilkinson Brimmer Katcher
Judith
Wilkinson / Jamie Moser, 212-355-4449
or
iPCS Investor
Relations Contact:
FD
Nathan Elwell, 312-553-6706
nathan.elwell@fd.com
