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Cavalier Acquires Talk AmericaCavalier Acquires Talk America

Cavalier Telephone & TV enters into agreement to acquire Talk America for $251M

September 22, 2006

2 Min Read
Cavalier Acquires Talk America

RICHMOND, Va. -- Cavalier Telephone & TV, announced today that it has entered into an agreement to purchase Talk America, Inc. The deal, expected to close in December, is subject to Talk America shareholder and regulatory approval.

Cavalier has offered $8.10 cash per share for all outstanding shares of Talk America, resulting in a $251M purchase price. The $8.10 share price is a 23% premium over Talk America's closing price as of Thursday, September 21st, 2006. Cavalier has received commitment letters from Wachovia Bank, N.A. for the financing of the transaction.

On a pro forma basis, the combined companies are projecting over $750M in revenue, $130M in adjusted EBITDA and $50M in free cash flow (EBITDA minus CAPEX and interest expense) in 2006. The combined companies currently serve over 550,000 residential customers, 85,000 business customers and employ over 2,000 people. After the acquisition is completed, Cavalier will serve customers in 6 of the top 20 metropolitan services areas (MSAs) in the country, including Atlanta, Baltimore, Cleveland, Detroit, Philadelphia and suburban Washington, DC.

Cavalier's CEO Brad Evans will become Executive Chairman of Cavalier and Talk America's CEO, Ed Meyercord, will assume the role of CEO for Cavalier. The company will be headquartered in Richmond, VA. Cavalier is a privately held company whose equity holders include MC Venture Partners, Banc of America Capital Investors and BB&T Capital Partners.

"We believe that this acquisition combines the strengths of two of the nation's most robust competitive carriers. Talk's state-of-the-art back office support system and Cavalier's advanced network architecture will help provide our combined customers the newest and most advanced telecommunications' solutions in the marketplace. Since our inception, Cavalier's focus has been to develop facilities-based networks capable of delivering the highest quality voice and data products. Cavalier's networking capability can now be leveraged with Talk's core Michigan, Ohio and Southeastern markets. Additionally, the cost savings that we will be able to capture and revenue synergies that we will generate from this acquisition, will provide substantial accretive value to the business," commented Mr. Evans.

"We're excited to join forces with Cavalier and continue our combined objectives of delivering superior products and services at competitive rates compared to those offered by the monopoly cable and telephone companies," stated Mr. Meyercord. "Our shared marketplace vision, values and competitive spirit will make this a win-win-win for our customers, our employees and our investors," concluded Mr. Meyercord.

"This merger will allow Cavalier to deploy our robust set of DSL and high capacity products and services throughout Ohio, Georgia and Michigan. Cavalier will also utilize its fiber-optic network infrastructure to deploy and support our Triple Play of voice, internet and video services throughout these newly acquired market areas, giving us millions of total homes passed," concluded Mr. Evans.

Cavalier Telephone Inc.

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