Covista Communications, Inc. (NASDAQ:CVST), a provider of bundled telecommunication services for residential and small business customers, today announced that it has completed the previously announced transaction to sell selected long distance commercial long distance customers, switches and related facilities to PAETEC Communications, Inc., a Fairport, New York based competitive local exchange carrier.
The price for the selected customers and assets was approximately $13.5 million, of which approximately $8.4 million was received at closing. The remaining balance of the purchase price is to be paid in two installments, with the last payment due in nine months, subject to final adjustment.
A portion of the initial proceeds was used to repay Covista's revolving credit facility with Capital Source Finance. After closing, Kevin Alward resigned from Covista as Chief Operating Officer and a member of the Board of Directors, to pursue other opportunities.
In a second transaction, Covista expects to sell selected local commercial customers to PAETEC for an additional cash price of approximately $1.5 million. Management anticipates executing definitive agreements related to this transaction within the next 30 days.
John Leach, Chief Executive Officer of Covista, stated, "Closing this transaction represents a significant achievement for Covista. We have vastly improved our balance sheet with a strong cash position and zero bank debt. Additionally, we have solidified the focus of our operations both geographically and strategically. For the balance of 2004, we plan to build on the momentum we have created by extending our local service footprint to additional markets in the Northeast and Mid-Atlantic regions as well as certain states in the Southeast." Mr. Leach continued, "The Board of Directors expressed appreciation for Mr. Alward's efforts on behalf of the Company and best wishes in his future endeavors."
About Covista:
Covista is a facilities-based provider of telecommunications services with a substantial customer base, principally residential and small to medium sized businesses. Its products and services include a broad range of voice, data and Internet solutions, including long distance and toll-free services, local dial tone and features, calling cards, frame relay, Internet access, VPN, directory assistance and teleconferencing services. Covista currently owns and operates switches in Chattanooga, Dallas and Minneapolis. Covista operates Network Operation; call center and information technology facilities in Chattanooga to monitor its switched network and to coordinate its various services. For information on becoming a Covista customer, please telephone 800-805-1000 or visit the Company's website at www.covista.com.
About PAETEC:
PAETEC Communications Inc., a subsidiary of PAETEC Corp., is a communications solutions provider offering broadband services, including advanced voice and video, enhanced data and communications management services to medium-sized and large businesses, colleges and universities, hospitals, hotels, governmental organizations and associations. The company boasts one of the highest customer retention rates in the industry, and recently achieved the number two ranking on the acclaimed Deloitte Fast 500 list of fastest growing technology companies in North America.
Headquartered in Fairport, N.Y., PAETEC serves customers in 27 U.S. markets, including: Albany, Baltimore, Boca Raton, Boston, Buffalo, Chicago, Connecticut, Delaware, Fort Lauderdale, Long Island, Los Angeles, Miami, New Hampshire, New Jersey, New York City, Orlando, Orange County, Philadelphia, Pittsburgh, Poughkeepsie, Rhode Island, Rochester, San Diego, Northern Virginia, Syracuse, Washington D.C., and Western Massachusetts.
For more information, visit the PAETEC website at www.paetec.com.