WEST POINT, Ga.-InterCel Inc. said it will increase its stake in Powertel PCS Partners L.P., a company that won broadband personal communications services licenses in the Memphis, Tenn., Birmingham, Ala., and Jacksonville, Fla., major trading areas.
The merger is valued at $132 million. InterCel, which owns and operates cellular telephone systems in Georgia, Alabama and Maine, said it expects to issue about 9.7 million shares of stock to complete the proposed deal.
As part of the preliminary agreement, InterCel will increase its ownership in Powertel from 13.4 percent to 51.5 percent. However, the companies plan to issue a public stock offering to raise financing. After the stock offering is completed, plans call for InterCel to own about 37 percent of the company and former Powertel shareholders to own about 35 percent of the business. The transactions are subject to InterCel stockholder approvals.
Allen Smith, InterCel’s chief executive officer, noted the combination with Powertel will enable InterCel to provide enhanced services to a broader consumer base.
The companies said they expect the combined entity will raise about $250 million through concurrent public offerings of about $100 million of common stock and $150 million of debt securities. The companies expect these transactions to be completed in September or October. Proceeds from the offering will be used to partially fund the planned construction costs and initial operating losses of the companies’ PCS system. Powertel paid $124.5 million for its PCS licenses.
