HOUSTON, May 2, 2000 /PRNewswire via COMTEX/ -- Equalnet Communications Corp.
(OTC Bulletin Board: ENET) announced today that it had entered into a definitive
agreement to acquire Max-Tel Communications, Inc., a prepaid competitive local
exchange carrier (CLEC), for total consideration of up to $6 million in cash and
up to 12 million shares of restricted Equalnet common stock. Completion of the
transaction is subject to Equalnet's satisfactory completion of its due
diligence, obtaining required regulatory approvals, and Equalnet's financing of
the cash component of the transaction consideration. Equalnet has received a
preliminary commitment from a lender to provide the financing necessary to
consummate the transaction. Equalnet anticipates that the transaction will close
within 90 days.
Max-Tel's core business is providing prepaid dial tone to subscribers who
typically do not meet the credit criteria imposed by the incumbent local
exchange carriers. Based in Alvord, Texas, Max-Tel has approximately 18,000
subscribers and has regulatory approval to provide CLEC services in over 20
states. Max-Tel has applications pending to provide CLEC services in additional
states. Max-Tel has interconnect agreements with 6 incumbent local exchange
carriers. Its current annualized revenue is approximately $12 million. Max-Tel
advised Equalnet that for calendar 1999 it had pre-tax income of approximately
$1.4 million.
Mitchell Bodian, Equalnet's President and CEO, commented, "The prepaid CLEC
market is a relatively new, under-served, and rapidly growing telecom segment
without any clearly dominant competitors. We believe this presents an attractive
and potentially highly profitable niche market for Equalnet. Some industry
studies predict that the number of prepaid dial tone subscribers will double
between this year and next. Max-Tel has had success serving this market and we
expect it to provide us with a firm foundation upon which we can build a leading
prepaid CLEC operation." Bodian added, "Our infrastructure and facilities should
permit us to capitalize on Max-Tel's strengths and maximize the benefits of
combining the operations of Max-Tel and Equalnet."
This press release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934. Although Equalnet believes its expectations
are based on reasonable assumptions it can give no assurance such assumptions
will materialize. These statements are based on current expectations subject to
risks and uncertainties. Actual results will vary because of factors such as
customer attrition, increased competition, results of due diligence,
availability of financing, litigation, and other issues discussed in the
Company's Form 10-K and other filings of the Company with the S.E.C.
SOURCE Equalnet Communications Corp. |
