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Alltel filing reveals details of buyout negotiations Thursday, Jun 14, 2007 By Jason Wiest Arkansas News Bureau LITTLE ROCK - Alltel officials decided in January to look for a buyer to take the company private by late spring or early summer during favorable financial market conditions and in preparation for the upcoming 700 MHz spectrum auction. Those and other details of Alltel Corp.'s proposed buyout were revealed Wednesday in a "preliminary proxy" filed with the Securities and Exchange Commission. A date when shareholders will meet to consider the offer will be announced in a future proxy statement company officials will file after receiving feedback from SEC officials on Wednesday's filing, Alltel spokesman Andrew Moreau said. The filing also did not contain any information on executive compensation, which was not negotiated along with the buyout, nor a one-time employee bonus package that Alltel CEO said was negotiated in the sale. Wednesday's filing revealed that Alltel successfully negotiated upward after receiving a $71 per share offer on May 19 from TPG and GS Capital Partners, "the only offer we received that included a firm price, ... a contract ready to sign, and solid, committed financing that was firmly in place," Moreau said. "Alltel responded that it would require a higher price to proceed," according to the filing. "Shortly thereafter, the TPG/GSCP team responded with a 'best and final' offer of $71.50 per share. Alltel's board of directors voted unanimously to approve the deal on multiple possible risks, including that TPG and GS Capital could revoke the offer if other offers were pursued. The board also reasoned that "all of the private equity sponsors had had the same opportunity and been encouraged to make an accelerated bid at a compelling price," the filing said. Alltel had looked to speed up the process in early April, after one of several unnamed telecommunications companies in talks with Alltel since the spin-off of its wireline business in July 2006 indicated that it was not interested in a transaction. In an early April meeting, Alltel's board of directors "authorized the commencement of a formal, competitive process involving a number of private equity sponsors that called for final proposals from interested bidders by early June 2007," the filing said. "However, the board noted that an earlier deadline or a preemptive offer by one such group might provide the most attractive results for stockholders," the filing said. According to a May 22 article on the Wall Street Journal online, one private equity group was unhappy that a deal was announced prior to the June deadline. But Wednesday's filing said interested groups were repeatedly reminded that Alltel could make a deal prior to the stated deadline. Multiple private equity groups had indicated their interest, and later formed three groups of two, including TPG and GS Capital, according to the filing. Following a mid-April meeting, Alltel "contacted an additional strategic partner, but such party did not express interest in pursuing a strategic business combination," the filing said. Between May 2 and May 4, Alltel management then made presentations to each private equity sponsor group, and urged each to act quickly, and reiterated the push to action after a May 6 Wall Street Journal article reported details of the process. Two days later, Alltel sent the groups invitations and instructions for submitting final bids, giving a June 6 deadline but stating "that Alltel reserved full discretion to accelerate or preempt the process," the filing said. Per requests, Alltel made a second round of presentations from May 14 to May 16. Two days later, Alltel CEO Scott Ford and company general counsel Richard Massey got a call from TPG and GS Capital Partners indicating that they "were enthusiastic about acquiring Alltel and wished to enter into final negotiations." Wednesday's filing also noted, as did previous company filings, that Alltel is prohibited from soliciting other offers, but that it can receive unsolicited bids. If either party were to break off the deal, the other half would get a $625 million termination fee. The deal's closing date is set for May 20, 2008, although under certain provisions, that date could be extended to August 20, 2008, according to the filing. The filing also notes that the $27.5 billion cash and debt price tag tied to the deal has technically been reduced to $26.3 billion, although shareholders will still receive $71.50 per share. The principal reason, Moreau said, is that TPG and GS Capital will not refinance some Alltel debt in the form of notes as was originally planned, which will save the new owners money. Shares of Alltel (NYSE: AT) closed Wednesday at $68, up 25 cents. |
