Fiber network operator McLeod USA agreed to sell out to Paetec Holding Corp. for $557 million in stock and assumed debt, the companies said Tuesday.
Assuming both companies’ shareholders, and regulators, approve the deal, Paetec will absorb fiber-optic networks in 20 states and add such markets as Dallas, Houston, Denver, Detroit, Phoenix, Seattle and Cleveland to its own existing operations, which spans 23 states and the District of Columbia.
McLeodUSA networks contain 13,000 intercity route miles and about 4.000 metro route miles. The enlarged Paetec will operate 77 traditional voice switching facilities and 39 Internet Protocol soft switches.
McLeod USA holders will get 1.3 shares of PAETEC common stock for each share of McLeodUSA they own.
Due to high debt and issues related to a glut of U.S. fiber capacity, McLeodUSA went through bankruptcy reorganizations in 2001 and 2005 and emerged with private ownership.
In March, McLeodUSA sold its telephone, cable television and date network in Cedar Rapids and Marion, Iowa, to ImOn Communications for an undisclosed sum.