US LEC PAETEC merger complete

 US LEC Corp. (NASDAQ: CLEC) and privately owned PAETEC Corp. today announced the completion of their planned merger transaction, which is effective today. The combined company will conduct business as PAETEC Holding Corp. (PAETEC), and its common stock will trade beginning tomorrow on the NASDAQ Global Select Market under the ticker symbol “PAET.”

“The completed merger is a significant milestone in the history of competitive U.S. carriers offering business telecommunications services,” said Arunas A. Chesonis, Chairman and Chief Executive Officer of PAETEC. “Bringing the two successful companies together enables us to offer a wider array of products and services over a greater geographic reach, thereby bringing increased value to our customers and stakeholders.”

PAETEC will have nearly 2,300 employees serving more than 45,000 medium-sized and large business customers. The company offers an extensive line of voice, data, and IP services, as well as enterprise communications management software, network security solutions, CPE, and managed services.

“The result of this merger not only provides US LEC shareholders with substantial value, but also creates considerable opportunities for customers and stakeholders of the combined company,” said Richard Aab, Vice Chairman of PAETEC, who had served as US LEC’s chairman. “From various perspectives, the merger of the two outstanding communications companies was an ideal fit.”

Expected cost savings and additional revenue synergies should contribute to strong cash flows and a solid balance sheet, while the PAETEC customer base should benefit from the combined product sets of the two companies and from some of the best customer service and support in the industry. PAETEC will be able to offer a greater suite of advanced products and services over an extremely flexible, capital efficient network through a high-quality, customer-oriented sales force.

Under the terms of the merger agreement, US LEC stockholders are receiving one share of PAETEC common stock for each share of US LEC common stock, and PAETEC Corp. stockholders are receiving 1.623 shares of PAETEC common stock for each share of PAETEC Corp. common stock. US LEC and PAETEC Corp. stockholders holding stock certificates will soon receive share exchange instructions.

PAETEC obtained $850 million of new credit facilities at the closing of the merger transaction. PAETEC Corp. and US LEC, which became PAETEC subsidiaries as a result of the merger transaction, used $800 million of facility proceeds and cash on hand to refinance substantially all of their senior secured indebtedness and to repurchase all outstanding shares of US LEC convertible preferred stock.

The combination, which was announced August 14, 2006, was approved by both companies’ stockholders at meetings held on February 28, 2007. The companies had previously received the necessary regulatory approvals from the Federal Communications Commission and applicable state regulatory agencies, and the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 had expired.

PAETEC executives are expected to ring the opening bell at the NASDAQ Stock Market on Thursday, March 1.

Company Leadership and Headquarters
Arunas A. Chesonis will continue to serve PAETEC as Chief Executive Officer and Chairman of the Board. EJ Butler will continue as Chief Operating Officer, and Keith Wilson will continue as Chief Financial Officer and as a member of the Board.

Richard T. Aab, co-founder of US LEC, will serve as vice Chairman of the Board. Other board members include H. Russell Frisby, Jr., partner-in-charge of the Telecom Group of the law firm of Fleischman and Walsh, L.L.P., Tansukh V. Ganatra, co-founder of and immediate past US LEC interim CEO, James A. Kofalt, President of KOCOM Communications, Inc., William R. McDermott, President and CEO SAP America, Inc., Michael C. Mac Donald, President of Global Accounts and Marketing Operations for Xerox Corp., and Mark Zupan, Dean of the William E. Simon Graduate School of Business Administration at the University of Rochester.

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