Hawaiian Telcom Stockholders to Receive $30.75 per Share Consideration in a Cash and Stock
Transaction
Companies Join Forces to Ensure Continued Focus on Fiber Investments in Local
Communities
HONOLULU, July 10, 2017 (GLOBE NEWSWIRE) -- Hawaiian Telcom (NASDAQ:HCOM), Hawai‘i’s leading fiber-based integrated communications provider,
and Cincinnati Bell (NYSE:CBB), a leading fiber and IT services and solutions business, today announced that their boards of
directors approved a definitive agreement under which the companies will combine in a cash and stock transaction valued at
approximately $650 million, including the assumption of net debt.
Under the agreement, Hawaiian Telcom stockholders will have the option to elect either $30.75 in cash, 1.6305 shares of
Cincinnati Bell common stock, or a mix of $18.45 in cash and 0.6522 shares of Cincinnati Bell common stock for each share of
Hawaiian Telcom, subject to proration such that the aggregate consideration to be paid to Hawaiian Telcom stockholders will be 60
percent cash and 40 percent Cincinnati Bell common stock. This consideration represents a 26 percent premium to Hawaiian Telcom’s
closing price of $24.44 on July 7, 2017, 24 percent premium to the volume-weighted average price of the last 20 calendar days of
$24.86, and 31 percent premium to the volume-weighted average price of the last 12 months of $23.55. Upon the closing of the
transaction, Hawaiian Telcom stockholders will own approximately 15 percent and Cincinnati Bell stockholders will own approximately
85 percent of the combined company.
Hawaiian Telcom and Cincinnati Bell will continue to maintain their separate local brand identities and operations, while
combining their buying power and resources to continue to focus on delivering world class integrated communications and technology
solutions for their local communities.
“Cincinnati Bell’s track record of success and commitment to investing in the build out of its regional fiber network in both
urban and non-urban areas over the past decade makes it a great partner for us,” said Scott Barber, Hawaiian Telcom president and
chief executive officer. “We look forward to sharing our companies’ fiber expertise and enhanced service offering as we continue to
expand our Next-Generation Fiber Network throughout the state of Hawai‘i. With our highly complementary values, distinctive brands
and vision focused on fiber as the future, and our shared commitment to the communities in which we operate, I am confident this
partnership will provide great opportunities for growth and value creation to both Hawaiian Telcom and Cincinnati Bell
stockholders, along with our customers and partners.”
“Cloud migration, the need for fiber infrastructure that supports 5G-ready, high-density data transmission and IoT are the key
trends that will define telecommunications in the future,” said Leigh Fox, president and chief executive officer of Cincinnati
Bell. “We are excited about the opportunity to partner with Hawaiian Telcom as part of Cincinnati Bell’s refined strategy to build
two distinct businesses with the appropriate scale, structure and leadership to deliver superior operating results, while providing
strategic optionality from a diversified but complementary portfolio of assets. Today’s announcement positions us to capitalize on
these favorable market dynamics while enhancing our leadership at the forefront of the telecommunications landscape. Hawaiian
Telcom brings Cincinnati Bell greater financial and operational scale and an established market position in a new geography to
seize upon the growing demand for fiber.”
The merger will bring together two companies with complementary values, goals, and business strategies with a shared focus on
investing in and monetizing its fiber networks. The companies have been successful for generations, Hawaiian Telcom since 1883 and
Cincinnati Bell since 1873, because of their commitment to their local communities and their desire to provide access to innovative
technologies that fuel social and economic development.
This merger will combine Hawaiian Telcom’s 1,300 employees with Cincinnati Bell’s 3,000 to create a bigger and stronger
enterprise that will foster greater innovation and deliver more competitive products and services to customers. Cincinnati Bell is
committed to Hawaiian Telcom’s workforce and ensuring that it can meet the needs of its customers today and into the future. Also,
due to distance and separate operations, this merger is not expected to materially impact jobs in Hawai‘i. In fact, Cincinnati Bell
has committed to investing in Hawaiian Telcom’s Next-Generation Fiber network statewide, which will create additional opportunities
for growth.
Hawaiian Telcom will continue to be locally managed from Hawai‘i and its existing union labor agreements will be honored.
Hawaiian Telcom will name two directors to the combined company board of directors and these seats will be held by Hawai‘i
residents, ensuring that Hawai‘i is well represented when broader strategic decisions are made.
The partnership between Hawaiian Telcom and Cincinnati Bell is an important step towards building scale and locking in fiber
density value for stockholders and customers, as Cincinnati Bell continues to anticipate and capitalize on the growing demand for
fiber capacity. With the merger, Cincinnati Bell gains access to both Honolulu, a well-developed, fiber-rich city, as well as to
the growing neighbor islands, and will provide Hawaiian Telcom with expanded liquidity and capital flexibility to continue to
expand its Next-Generation Fiber network to enable growth and better serve its customer base statewide. The companies’ combined
fiber networks exceed 14,000 fiber route miles. In addition, Hawaiian Telcom provides Cincinnati Bell with direct access to the
2.6TB of transpacific fiber cable capacity linking Asia and the U.S., which expands Cincinnati Bell’s route diversity and gives the
combined company exposure to large, data-hungry demographics on both sides of the Pacific.
“Hawaiian Telcom’s transformation from a legacy telephone company to Hawai‘i’s Technology Leader would not have been possible
without our employees’ hard work and dedication as well as the ongoing support of our stockholders,” added Barber. “Hawaiian Telcom
is in a position to benefit from this merger because of their diligence and commitment. This deal represents the beginning of a
positive new chapter in Hawaiian Telcom and Cincinnati Bell’s rich legacies in its communities and our mutual desire to ensure our
companies continue to stand the test of time. This combination of like-minded, locally-focused companies has the potential to not
only ensure our long-term sustainability, but to catapult our growth. Together, Hawaiian Telcom and Cincinnati Bell will continue
to expand the reach of our state-of-the-art fiber network statewide, launch innovative IP-based products and services and as a
result, strengthen our competitive position and transform our growth profile.”
This transaction is subject to certain customary closing conditions including federal and state regulatory approvals and
approval by Hawaiian Telcom’s stockholders. The merger is expected to close in the second half of 2018.
UBS Investment Bank is acting as financial advisor to Hawaiian Telcom, and Gibson, Dunn & Crutcher LLP is serving as legal
counsel. Moelis & Company and Morgan Stanley & Co. LLC are acting as financial advisors to Cincinnati Bell, and Cravath, Swaine &
Moore and Morgan, Lewis & Bockius, and BosseLaw, PLLC are serving as legal counsel.
Conference Call
Cincinnati Bell will host a conference call on July 10, 2017, at 8:30 a.m. (ET) to discuss the transactions. A live webcast of
the call will be available via the Investor Relations section of www.cincinnatibell.com. The conference call dial-in number is 800-930-1344, with the passcode
3371598. Callers located outside of the U.S. and Canada may dial 719-457-2662. A taped replay of the conference call will be
available shortly after the conclusion of the call. The replay will be available at 888-203-1112. For callers outside of the U.S.
and Canada, access information for the replay can be found here. The replay reference number is 3371598. An archived version of the webcast will also be
available in the Investor Relations section of www.cincinnatibell.com.
About Hawaiian Telcom
Hawaiian Telcom (NASDAQ:HCOM), headquartered in Honolulu, is Hawai‘i's technology leader, providing
integrated communications, broadband, data center and entertainment solutions for business and residential customers. With roots in
Hawai‘i beginning in 1883, the Company offers a full range of services including Internet, video, voice, wireless, data network
solutions and security, colocation, and managed and cloud services supported by the reach and reliability of its next generation
fiber network and a 24/7 state-of-the-art network operations center. With employees statewide sharing a commitment to innovation
and a passion for delivering superior service, Hawaiian Telcom provides an Always OnSM customer experience. For more
information, visit hawaiiantel.com.
About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:CBB) provides integrated communications solutions –
including local and long distance voice, data, high-speed Internet and video – that keep residential and business customers in
Greater Cincinnati and Dayton connected with each other and with the world. In addition, enterprise customers across the United
States rely on CBTS, a wholly-owned subsidiary, for efficient, scalable office communications systems and end-to-end IT solutions.
For more information, please visit www.cincinnatibell.com.
Additional Information and Where to Find It
In connection with the proposed merger, Hawaiian Telcom intends to file a preliminary proxy statement and file or furnish other
relevant materials with the Securities and Exchange Commission (the “SEC”). Once the SEC completes its review of the
preliminary proxy statement, a definitive proxy statement and a form of proxy will be filed with the SEC and mailed to the
stockholders of Hawaiian Telcom. Cincinnati Bell also intends to file with the SEC a registration statement on Form S-4 in
connection with the merger, which will include the definitive proxy statement and a prospectus with respect to Cincinnati Bell’s
common shares to be issued in connection with the merger. BEFORE MAKING ANY VOTING DECISION, HAWAIIAN TELCOM’S STOCKHOLDERS
ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN
CONNECTION WITH THE PROPOSED MERGER (INCLUDING, BUT NOT LIMITED TO, THE REGISTRATION STATEMENT ON FORM S-4 FILED BY CINCINNATI
BELL) OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT (IF ANY) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED MERGER AND THE PARTIES TO THE PROPOSED MERGER. Investors and stockholders may obtain a free copy of documents filed
by Hawaiian Telcom and/or Cincinnati Bell with the SEC at the SEC’s website at http://www.sec.gov. In addition, investors and stockholders may obtain a free
copy of Hawaiian Telcom’s filings with the SEC from Hawaiian Telcom’s website at http://ir.hawaiiantel.com or by directing a request to: Hawaiian Telcom Holdco,
Inc., 1177 Bishop Street, Honolulu, HI 96813, Attention: Secretary, (808) 546-4511. Investors and stockholders may obtain a
free copy of Cincinnati Bell’s filings with the SEC from Cincinnati Bell’s website at http://investor.cincinnatibell.com or by directing a request to: Cincinnati Bell
Inc., 221 East Fourth Street, Cincinnati, OH 45202, Attention: Corporate Secretary, (513) 397-9900.
Participants in the Solicitation
Hawaiian Telcom, Cincinnati Bell and their respective directors and certain of their respective executive officers and
employees may be deemed to be participants in the solicitation of proxies from stockholders of Hawaiian Telcom in favor of the
proposed merger. Information about Hawaiian Telcom’s directors and executive officers and their ownership of Hawaiian
Telcom’s common stock is set forth in Hawaiian Telcom’s annual report on Form 10-K for the fiscal year ended December 31, 2016, as
filed with the SEC on March 14, 2017, and its definitive proxy statement for its 2017 annual meeting of stockholders, as filed with
the SEC on Schedule 14A on March 14, 2017. Information about Cincinnati Bell’s directors and executive officers is set forth
in its definitive proxy statement for its 2017 annual meeting of shareholders, which was filed with the SEC on March 24, 2017.
These documents are available free of charge from the sources indicated above. Certain directors, executive officers and employees
of Hawaiian Telcom and Cincinnati Bell may have direct or indirect interests in the proposed merger due to securities holdings,
vesting of equity awards and rights to severance payments. Additional information regarding the direct and indirect interests of
these individuals and other persons who may be deemed to be participants in the solicitation will be included in the proxy
statement, the registration statement and other relevant materials with respect to the merger that Hawaiian Telcom and Cincinnati
Bell intend to file with the SEC and furnish to the Company’s stockholders.
No Offer or Solicitation
The information in this communication is for informational purposes only and is neither an offer to purchase, nor a
solicitation of an offer to sell, subscribe for or buy any securities or the solicitation of any vote or approval in any
jurisdiction pursuant to or in connection with the proposed transactions or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended and otherwise in accordance with
applicable law.
Forward-Looking Statements
This release includes certain statements and predictions that constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). In particular, any statement, projection or
estimate that includes or references the words “believes”, “anticipates”, “intends”, “expected”, “will” or any similar expression
falls within the safe harbor of forward-looking statements contained in the Reform Act. Actual results or outcomes may differ
materially from those indicated or suggested by any such forward-looking statement for a variety of reasons, including, but not
limited to: failures in Hawaiian Telcom’s critical back office systems and IT infrastructure; breach of the our data security
systems; increases in the amount of capital expenditures required to execute our business plan; the loss of certain outsourcing
agreements, or the failure of any third party to perform under these agreements; our ability to sell capacity on the new submarine
fiber cable project; adverse changes to applicable laws and regulations; the failure to adequately adapt to technological changes
in the telecommunications industry, including changes in consumer technology preferences; adverse economic conditions in Hawai‘i;
the availability of lump sum distributions under our union pension plan; limitations on the ability to utilize net operating losses
due to an ownership change under Internal Revenue Code Section 382; the inability to service our indebtedness; limitations
imposed on our business from restrictive covenants in the credit agreements; severe weather conditions and natural disasters; the
occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with
Cincinnati Bell or conditions to the closing of the merger may not be satisfied or waived; the failure to obtain the approval of
the Company’s stockholders or the failure to satisfy the closing conditions; risks related to disruption of management’s attention
from the Company’s ongoing business operations due to the proposed merger; the effect of the announcement of the merger on the
ability of the Company to retain and hire key personnel, maintain relationships with its customers and suppliers, and operating
results and business generally; the transaction may involve unexpected costs, liabilities or delays; the Company’s business may
suffer as a result of the uncertainty surrounding the transaction; the outcome of any legal proceeding relating to the transaction;
the Company may be adversely affected by other economic, business and/or competitive factors; and other risks to consummation of
the transaction, including the risk that the transaction will not be consummated within the expected time period or at all.
More information on potential risks and uncertainties is available in recent filings with the Securities and Exchange Commission,
including Hawaiian Telcom’s 2016 Annual Report on Form 10-K. The information contained in this release is as of July 10, 2017. It
is anticipated that subsequent events and developments may cause estimates to change, and the Company undertakes no duty to update
forward-looking statements.
Media Contact: Su Shin (808) 546-2344 su.shin@hawaiiantel.com Investor Contact: Ngoc Nguyen (808) 546-3475 ngoc.nguyen@hawaiiantel.com
