SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 31, 2002
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McLEODUSA INCORPORATED
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-20763 42-1407240
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(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
McLeodUSA Technology Park, 6400 C Street SW, P.O. Box 3177,
Cedar Rapids, IA 52406-3177
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (319) 790-7800
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(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
On December 31, 2002, McLeodUSA Holdings, Inc., McLeodUSA
Telecommunications Services, Inc., McLeodUSA Integrated Business Systems, Inc.
and McLeodUSA Market Response, Inc., each a wholly-owned subsidiary of
McLeodUSA Incorporated ("McLeodUSA"), completed the sale of Illinois
Consolidated Telephone Company ("ICTC") and certain related telecommunications
businesses to Consolidated Communications, Inc., an Illinois corporation
("Consolidated Communications") and a subsidiary of Consolidated
Communications Holdings, Inc., a Delaware corporation ("Consolidated
Communications Holdings"). Consolidated Communications was successor to
Consolidated Communications Holdings under the Acquisition Agreement, dated as
of July 16, 2002, by and among McLeodUSA Telecommunications Services, Inc.,
McLeodUSA Holdings, Inc., McLeodUSA Integrated Business Systems, Inc.,
McLeodUSA Market Response, Inc. and Consolidated Communications Holdings
(f/k/a Homebase Acquisition Corp.) (the "Acquisition Agreement"). A copy of
the Acquisition Agreement was filed by McLeodUSA with the Securities and
Exchange Commission as Exhibit 99.1 to Current Report on Form 8-K on August 6,
2002. The purchase price was $271.2 million, less $20 million of ICTC assumed
indebtedness, resulting in total gross cash proceeds to McLeodUSA of
approximately $251 million. In accordance with McLeodUSA's May 2000 Credit
Agreement, as amended, $225 million of the net proceeds from the sale were
used to reduce the Term A and Term B loans under such credit agreement.
In connection with the transaction, McLeodUSA and certain of its
subsidiaries entered into a series of operating agreements with Consolidated
Communications and its subsidiaries, including ICTC, pursuant to which the
parties will provide wholesale long-distance, telemarketing and fulfillment,
and operator-assistance services and other services to each other.
Consolidated Communications Holdings is a newly formed company financed by
Spectrum Equity Investors, Providence Equity and Richard A. Lumpkin. Mr.
Lumpkin was the principal owner of ICTC prior to its sale to McLeodUSA in
September 1997 and following the acquisition, continued to serve as the
Chairman, President and CEO of ICTC. Mr. Lumpkin was also Vice Chairman and a
director of McLeodUSA from September 1997 to April 2001.
On December 31, 2002, McLeodUSA Incorporated issued a press
release relating to the foregoing. A copy of the press release is attached
hereto as Exhibit 99.1 and is incorporated in its entirety herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
DESCRIPTION
(c) Exhibits.
2.1 Acquisition Agreement, dated as of July 16, 2002, by and
among McLeodUSA Telecommunications Services, Inc., McLeodUSA
Holdings, Inc., McLeodUSA Integrated Business Systems, Inc.,
McLeodUSA Market Response, Inc. and Consolidated
Communications Holdings (f/k/a Homebase Acquisition Corp.)
(incorporated by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K dated August 6, 2002).
99.1 Press Release issued by McLeodUSA Incorporated on December
31, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 7, 2003 McLEODUSA INCORPORATED
By: /s/ G. Kenneth Burckhardt
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G. Kenneth Burckhardt
Chief Financial Officer
EXHIBIT INDEX
99.1 Press Release issued by McLeodUSA Incorporated on December 31, 2002.