PAETEC delivers personalized communications solutions and unmatched service nationwide to business-class customers. Founded in 1998, the company is the premier alternative to incumbent local exchange carriers (ILECs) for business customers in 82 of the largest 100 metropolitan areas in the United States. Headquartered in Fairport, N.Y., PAETEC is a publicly traded company (NASDAQ GS: PAET).
- 面临的难题
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The one-two punch of the 9/11 attacks and the bursting of the so-called “tech bubble” sent shockwaves through the telecommunications industry in the early part of this decade. Thanks to a sensible business plan and a management team with the experience and discipline to execute it, PAETEC came through this tumultuous period in good shape.
By mid-2006, the company saw the opportunity to take a major step forward by joining forces with US LEC, a publicly traded telecom service provider with significant presence along the East Coast.
While many mergers in this highly competitive industry are about companies trying desperately to survive, this one was about capitalizing on the synergy between two strong companies. These were compatible enterprises with only a partial overlap in business interests. They would be stronger financially and operationally together than apart, management emphasized.
To complete the merger, PAETEC and US LEC needed a financial services partner with the resources, commitment and industry knowledge to develop a financing plan that met the needs of all stakeholders.
- 解决方案
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PAETEC and CIT already had a long-standing business relationship that dated back almost to PAETEC’s founding. Over the years the relationship grew and, eventually, CIT became an equity investor in PAETEC, as well as a lead lender and provider of customer financing.
The Communications, Media & Entertainment (CME) group of CIT Corporate Finance focuses exclusively on the needs of clients in those industries, giving CIT a perspective that is often lacking in conventional lenders.
Because of their knowledge of the telecommunications industry, the CME team was able to accurately assess the many benefits of combining the privately held PAETEC with publicly held US LEC to create a new company led by PAETEC founder and CEO Arunas Chesonis and his proven management team.
With a game-changing acquisition on the table, the companies turned to the telecommunications industry specialists at CIT for the financing they needed to consummate the deal.
- 结果
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In August 2006, PAETEC and US LEC announced plans to create a new company worth an estimated $1.3 billion, which would retain the PAETEC name. CIT provided the $850 million in debt financing needed to complete the merger, which closed in February 2007.
CIT has financed seven transactions for PAETEC over the last decade. Most recently, CIT was one of the lead lenders in a group that provided $100 million in capital to PAETEC following its 2008 acquisition of McLeodUSA. In addition to basic financing, CIT plays a critical role in supporting the PAETEC sales force by providing equipment financing to PAETEC customers.
PAETEC has achieved remarkable growth, with a run rate of more than $1.7 billion in annual revenue, the equivalent of more than 4.1 million access lines in service and nearly 4,000 employees. The company's national network infrastructure encompasses 77 traditional switching facilities, 39 Internet Protocol soft switches, and 17,000 local route miles of fiber.
Prospects for PAETEC’s continued success are excellent, fueled by a broad portfolio of communications services. Data services include multi-site multiprotocol label switching virtual private networks (MPLS VPN) and Dynamic Internet Protocol, as well as Hosted Security, Dedicated Internet Access and Managed customer premises equipment (CPE) firewall. Voice solutions include Voice-over-Internet Protocol (VoIP) and traditional time-division multiplexing (TDM) offerings as well as hybrid solutions. PAETEC also offers equipment and equipment financing, telecom expense-management software, and fixed wireless services.
