EarthLink purchase of ITC^DeltaCom triggers notes' change of control

By Marisa Wong

Madison, Wis., Oct. 1 - A change-of-control put option will be triggered on ITC^DeltaCom, Inc.'s $325 million of outstanding 10½% senior secured notes, if the company's merger with EarthLink, Inc. is completed, the companies said Friday.

EarthLink and DeltaCom announced a definitive merger agreement under which EarthLink will acquire DeltaCom and assume DeltaCom's 10½% senior secured notes due 2016.

The closing of the merger will trigger a requirement in the notes' indenture that DeltaCom offer to purchase any or all of the notes at 101% of par, the companies said Friday.

Notes not purchased in connection with the merger will remain outstanding as obligations of DeltaCom and its subsidiaries.

EarthLink will acquire DeltaCom for $3.00 per share in cash. The transaction is valued at about $516 million, which includes the assumption of the 10½% notes.

The purchase price represents approximately 4.7 times adjusted EBITDA for the 12 months ended June 30, including expected cost synergies and excluding one-time transaction costs.

The acquisition will enable EarthLink to create a leading IP infrastructure and solutions company by combining its existing ISP and IP-focused businesses with DeltaCom's integrated communications business.

EarthLink is an Atlanta-based internet service provider.

ITC^DeltaCom is a Huntsville, Ala.-based provider of integrated telecommunications and technology services.

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