RCNC enters Chicago:
biz.yahoo.com
Monday December 13, 4:07 pm Eastern Time
NEW YORK, Dec 13 (Reuters) - Telephone and Internet services company RCN Corp. (NasdaqNM:RCNC - news), which serves businesses and residents on the East and West Coasts, on Monday pushed into the Midwest as it agreed to acquire 21st Century Telecom Group Inc. of Chicago for about $260 million in stock.
The deal will extend the reach of RCN's fiber-optic networks to 3.1 million Chicago-area homes, offering phone, cable television and high-speed Internet services.
``The addition of this market expands our coverage to nearly 42 million homes in an area that generates 44 percent of the nation's telecom traffic in only 6 percent of its geography,' said RCN Chairman David McCourt.
RCN will gain 21st Century's operating and network expertise and its rights-of-way agreements with the Chicago Transit Authority. 21st Century has built nearly 250 miles of fiber along Chicago's lakefront from Evanston to the Hyde Park area, including the ``Gold Coast.'
Shares of RCN gained 1-15/16 to 43-9/16 on Nasdaq.
The proposed acquisition follows a recent $1.65 billion investment in RCN by Vulcan Ventures Inc., Microsoft co-founder Paul Allen's venture capital arm.
Under the 21st Century deal, which is subject to antitrust and other regulatory approvals, 21st Century shareholders will receive about 4.7 million RCN shares and offer to to exchange 21st Century preferred stock for 62 million RCN shares.
RCN also will offer to purchase 21st Century's outstanding 12-1/4 percent senior discount notes for $250 million in cash.
Adjusting for the 21st Century transaction, RCN said it will have $3.6 billion in cash and available capital, enough to fund the company's aggressive network expansion and continuing operations through late 2002 and to over 4.5 million homes.
RCN provides local and long distance phone, cable television and Internet services from Boston to Washington, D.C. on the East Coast, and San Francisco to San Diego in the West.
In Chicago, the combined RCN and 21st Century will compete against the dominant local telephone company Ameritech Corp., a unit of SBC Communications Inc. (NYSE:SBC - news), and AT&T Corp. (NYSE:T - news) new cable operations. |
