NuVox secures $87 million additional equity funding

NuVox Communications, a rapidly growing, facilities-based broadband ser-vices provider, announced that it has raised $87 million of additional equity in a private placement. NuVox had originally targeted raising $75 million but in-creased the size of the offering due to over-subscriptions.

According to a NuVox press release, Salomon Smith Barney Inc. acted as the company's financial advisor in connection with the financing.

NuVox began providing voice and data services in an expanding number of U.S. markets since it commenced its initial operations in St. Louis in June 1999. The company now provides facilities-based integrated voice and data services to business customers in 30 markets in 13 contiguous states across the Midwest and Southeast, including Missouri.

The additional round of equity financing increases NuVox's total capital to more than $775 million, including its $225 million senior secured credit facility.

"We consider it to be a strong endorsement of our business strategy and management team that we have been able to attract meaningful amounts of additional capital for our company despite the prolonged downturn in private and public equity markets and the challenging operating environment for emerging telecommunications companies," said David L. Solomon, chairman and chief executive officer of NuVox. "This additional capital fully funds the continued development of our existing 30 markets and provides a cushion to see us through these difficult times."

The investors include private equity funds associated with Goldman Sachs & Co., Whitney & Co., JP Morgan Part-ners, Meritage Private Equity Fund, Moore Capital, Richland Ventures, Brooks Investments, Centennial Funds, Don Investment Group, Norwest Equity Partners, First Union Capital Partners, Telecom Partners, Boston Millennia Partners, Toronto Dominion Capital, OneLiberty Ventures, CIBC WMC Inc. and Bank of America Capital Investors.

Michael R. Hannon, partner of JP Morgan Partners, said, "We believe the current financial turmoil affecting emer-ging telecommunications companies presents significant opportunities for investments in best-managed, well-capitalized companies. NuVox has been able to post solid high growth results despite a declining economic environment and difficult capital market conditions. Our investing group believes that NuVox is well positioned to capture significant market share by virtue of its strong customer focus, proven provisioning capabilities and attractively priced service packages."

"This additional capital permits us to continue to invest in the development of our markets and allows for demand-driven spending as we add customers," said Mike Cassity, NuVox president and chief operating officer. "It provides additional financial support for the pursuit of our strategic objective to be the integrated communications provider of choice, delivering superior broadband services and customer care."

Annualized revenues for NuVox's 30 markets totaled $94.6 million for August 2001, more than 37 times the $2.5 million of annualized revenues NuVox recorded for December 1999. On-Net lines installed during the second quarter of 2001 totaled over 31,000 lines, a 31 percent increase over the first quarter of 2001 and a more than 625 percent increase from the second quarter of 2000. During the same period, gross profit margins have increased from 9.7 percent in 1999 to 26 percent in August 2001. EBITDA loss margins in the second quarter of 2001 improved by over 4200 basis points over the first quarter of 2001.

Solomon added, "We believe this level of growth and these results demonstrate the validity of the assumptions we made when we developed our business plans and confirm the attractiveness of our product offerings to business customers, as well as the dedication of the entire NuVox team to providing high quality responsive customer service. We remain committed to continued improvements in results to achieve our goal of becoming EBITDA positive by the fourth quarter of 2002 and attaining positive free cash flow by the end of 2003."