McLeodUSA shareholders to vote on Paetec merger at meeting instead of through written notice

By Lisa Kerner

Charlotte, N.C., Dec. 19 - Paetec Holding Corp. and McLeodUSA Inc. amended their Sept. 17 merger agreement to require McLeodUSA shareholders to vote on the deal at a special meeting.

Originally, written consents delivered by holders of a majority of McLeodUSA's voting power were needed to satisfy the closing condition.

The amendment was adopted to meet regulatory requirements, according to a form 8-K filing with the Securities and Exchange Commission.

In addition, McLeodUSA stockholders collectively owning some 67.6% of the company's outstanding common stock agreed to vote their shares in favor of the merger agreement at the special meeting.

The stockholders include investment funds managed by Wayzata Investment Partners LLC, investment funds and entities advised by Fidelity Management & Research Co. and its affiliates, and Jefferies High Yield Trading, LLC.

Paetec and McLeodUSA are expected to hold their special meetings on or close to the same date.

It was previously reported that the all-stock merger is valued at $557 million, including $65 million in net debt assumption.

The transaction is expected to close in the first quarter of 2008.

The Federal Communications Commission has approved Paetec's acquisition of McLeodUSA, and the Federal Trade Commission granted early termination of the Hart-Scott-Rodino waiting period.

Paetec is a communication services company offering voice, data and internet protocol services. The company is based in Fairport, N.Y.

Privately held McLeodUSA provides managed IP-based communications services and traditional circuit-switched telephony services. The company is located in Cedar Rapids, Iowa.

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