Paetec eats USLEC

US LEC Corp. said Monday it agreed to be acquired by privately held Paetec Corp., a supplier of voice and broadband data services, for about $450 million, excluding debt. "US LEC and Paetec, a New York supplier of communications software and services, will operate as subsidiaries of a new public holding company, New Paetec, which will be headquartered in Fairport, N.Y." With 28,000 business customers, the 10 year old USLEC still bleeds money, while operating in 16 states and expanding into Wholesale and Triple-Play. USLEC had a 2Q06 net loss of $7.6 million on revenue of $106.7M. Paetec brings 17,000 business customers and $551M in annual revenue. Paetec borrowed $125M in March and opened another credit facility of $400M in June. The new $850M in financing the bankers are giving them for is to refinance Paetec's $374M in debt; USLEC's $158M; and to buy USLEC Preferred shares at $268M. (Fees are $25M). Combined they do not have $1B in revenue (it's more like $950M). It reminds me of Intermedia. (more to come)