UStel Inc. Signs Definitive Agreement to Merge with Arcada Communications.CULVER CITY Culver City, city (1990 pop. 38,793), Los Angeles co., S Calif., a residential suburb of Los Angeles; inc. 1917. It is a center of the U.S. motion-picture industry, whose roots in the city date to c.1915. Its chief manufactures are rubber products and computers. , Ca.--(BUSINESS WIRE)--Sept. 25, 1997--Ustel Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : USTL USTL Universite des Sciences et Technologie de Lille (French: University of Sciences and Technologies of Lille) , USTLW) today reported that it has executed a definitive agreement to merge with Arcada Communications, a switch-based interexchange carrier See IXC. based in Seattle, WA. The combined companies will serve approximately 50,000 customers nationwide with long distance, cellular, paging and internet access See how to access the Internet. services. For fiscal year 1996, UStel revenues were $22.0 million and Arcada revenues were $12.6 million. Pursuant to the terms of the merger agreement, UStel will issue 2.1 million shares of common stock and approximately $2.0 million of convertible debentures and will pay $5.0 million cash at closing. The number of shares is subject to adjustment based upon a formula related to the value of UStel's shares. The transaction is subject to shareholder approval, approvals from the Federal Communications Commission Federal Communications Commission (FCC), independent executive agency of the U.S. government established in 1934 to regulate interstate and foreign communications in the public interest. and various state regulatory agencies state regulatory agency A state body responsible for establishing professional standards, and for certifying professionals or organizations through appropriate documentation and other customary conditions including the maintenance of a minimum agreed upon share price for UStel stock. Closing is expected to be completed by January 1998. Arcada's strong network presence in the Northwest and Mountain states provides a key element of the nationwide switching network which the Company is developing in order to improve operating margins for the long term. Arcada currently provides cellular and paging service in a number of western markets, and has executed reseller contracts to cover much of the remainder of the country. In connection with the merger, UStel and Arcada intend to substantially consolidate their operations. This consolidation should result in significant synergies and cost savings through the elimination of duplicate overhead by combining billing and customer ability to provide expanded services to its current customer base. Robert L.B. Diener, Chairman and Chief Executive Officer of UStel said, "This merger is an outstanding example of the kind of strategic acquisitions which will fuel our development as a full service provider of telecommunications services nationwide." At the closing, Frank Bonadio, President of Arcada, will become the President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. for UStel. His experience and track record in the industry brings significant management strength to UStel. The Company also announced that Edmund C. King, Jr. has joined the Company as Chief Financial Officer. UStel also announced that as a result of a management review, certain unprofitable business and products will be discontinued. As a result, UStel will record a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of approximately $1.7 million in its third quarter 1997 results. The charge will comprise a writedown of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and an increase in bad debt expense related to those operations and discontinued businesses and products and severance expenses. UStel Inc. provides long distance and cellular telecommunications services for commercial, residential and specialty markets worldwide. Arcada Communications provides long distance, cellular and cellular long distance and paging services focused on the Northwest and Intermountain regions. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement: The statements contained in this release that are not historical facts may contain forward looking statements that involve a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated by management. Potential risks and uncertainties include, among other factors, general business conditions, competitive market conditions, success of the Company's growth and sales strategy, whether the Company will suffer customer attrition, whether the transaction between the Company and Arcada Communications will be successfully completed and integrated, whether the company will complete a proposed securities offering, whether the Company will have sufficient resources to realized its growth plans, development and introduction of new services, fluctuations in margins, and other risks and uncertainties currently unknown to management. The Company assumes no responsibility for updating the statement. CONTACT: UStel Inc. Robert L.B. Diener, 310/645-1770 |
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