Hector Gets Bought

Hector Communications Corporation has entered into an definitive merger agreement with Hector Acquisition Corporation (HAC)

June 27, 2006

2 Min Read

HECTOR, Minn. -- Hector Communications Corporation (AMEX:HCT) today announced that it has entered into an definitive merger agreement with Hector Acquisition Corporation (HAC), a recently formed corporation owned by Blue Earth Valley Communications, Inc., Arvig Enterprises, Inc. and New Ulm Telecom, Inc. (OTC:NULM) (BULLETIN BOARD: NULM) , three independent local exchange carriers operating in Minnesota. Under the terms of the agreement, shareholders of Hector Communications Corporation (the "Company") will be entitled to receive $36.40 per share in cash and outstanding options will be cashed out.

The Board of Directors of the Company has unanimously approved the merger agreement and will recommend that the Company's shareholders approve the merger when it is presented for shareholder approval at a shareholders meeting later this year. The Company's financial advisor, Stifel, Nicolaus & Company, Incorporated provided an opinion to the Company's Board that the consideration to be paid to the shareholders of the Company in the transaction is fair to such shareholders from a financial point of view. HAC has received a commitment letter from CoBank, ACB to provide the debt financing required for this transaction.

The consummation of the merger transaction is subject to a number of conditions, including approval by state and federal regulatory authorities and achieving working capital and long-term debt levels specified in the agreement.

In addition, completion of the merger is subject to closing of Alltel Corporation's acquisition of Midwest Wireless Holdings L.L.C. announced in November 2005. The Company is an owner of Midwest Wireless and, upon completion of the sale of Midwest Wireless to Alltel, expects to receive net, after tax proceeds of approximately $39,500,000. A Delaware court challenge to Alltel's acquisition of Midwest Wireless was recently dismissed, but the completion of this transaction is subject to several other conditions, including FCC and Hart-Scott-Rodino approvals. Based on information currently available to the Company, and subject to the satisfaction of all conditions to the merger, it is presently anticipated that HAC's acquisition of the Company will be completed in approximately 90 to 120 days.

Curtis A. Sampson, Chairman and Chief Executive Officer, stated: "The agreement with Hector Acquisition Corp. is the culmination of a process we began approximately one year ago to explore strategic alternatives available. We believe we have maximized shareholder value through this process."

Hector Communication Corp.

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