Web Hosting Provider MCI Accepts Revised Proposal from Verizon

HostReview.com
Tuesday, March 29, 2005; 05:38 PM

MCI, Inc. (www.mci.com) today said that it received revised proposals from Verizon and Qwest. After a review of both proposals MCI's Board of Directors accepted Verizon's revised offer. MCI and Verizon have amended their February 14, 2005 merger agreement accordingly.

Under the revised Verizon proposal, each MCI share will receive cash and stock worth at least $23.50, comprising an increase in cash of $2.75 (or approximately $900 million in the aggregate) to $8.75 (including MCI's March 15 dividend payment of $0.40 per share) as well as the greater of 0.4062 Verizon shares for every share of MCI Common Stock or Verizon shares valued at $14.75. Under this price protection feature, Verizon may elect to pay additional cash instead of issuing additional shares over the 0.4062 exchange ratio.

Of the $8.75, up to $5.60 is expected to be paid upon approval of the transaction by MCI's shareholders.

Under the revised proposal, MCI may be required to pay Verizon a termination fee in the event the agreement is terminated. Under specified circumstances, this termination fee has been increased to $240 million from $200 million and reimbursement to Verizon for its expenses up to $10 million.

In making its determination, MCI's Board considered the following factors, among others: the changing competitive nature of the telecommunications industry; increasing need for scale and comprehensive wireless capabilities; access economics; the level and achievability of synergies; strength of capital structure; the ongoing ability to sustain network service quality and invest in new capabilities; and ensuring ongoing customer confidence among MCI's large enterprise and government customers.