Consolidated Communications expects approval of SureWest deal

MATTOON — Consolidated Communications says it expects the California Public Utilities Commission to approve its acquisition of SureWest Communications on Thursday.

Shareholders of both Consolidated and SureWest are set to vote on the acquisition June 12. If approvals are given, Consolidated said it expects the transaction to close in early July.

Mattoon-based Consolidated already has subscriber lines in Illinois, Texas and Pennsylvania. If the deal goes through, it would pick up lines in California, Kansas and Missouri, where SureWest does business.

The proposed acquisition, announced Feb. 6, is valued at $341 million.

But the acquisition has been complicated by six lawsuits filed on behalf of SureWest shareholder groups, naming Consolidated, SureWest and others as defendants.

According to a recent Consolidated filing with the SEC, those suits allege, among other things, that SureWest's directors breached their fiduciary duties in negotiating the merger.

The suits contend the directors agreed to sell SureWest "at an unfair price, pursuant to an unfair process and pursuant to unreasonable terms."

Last Friday, the parties entered a memorandum of understanding in which they agreed on terms of a proposed settlement of the suits. But the settlement is not yet final.

According to Consolidated's filing with the SEC, the defendants deny all liability with respect to claims in the suits. But Consolidated and SureWest said they wanted to make additional disclosures about the merger.

Among the additional disclosures:

— SureWest directors believed regulators would be more likely to approve a merger with Consolidated than with another company (identified only as Company "A") because Con- solidated had gone through other mer- gers requiring regulatory approval.

— SureWest directors were concerned Company "A" might revoke its offer because of a specified deadline.

— Of 22 companies contacted about a possible transaction with SureWest, six were "financial sponsors" and 16 were considered "potential strategic partners."

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