By Hawaiin Telcom Press Release
July 10, 2017

HONOLULU, Hawaii – 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 $30.75in 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. LLCare acting as financial advisors to Cincinnati Bell, and Cravath, Swaine & Moore and Morgan, Lewis & Bockius, and BosseLaw, PLLC are serving as legal counsel.

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