Consolidated Communications Reaches a Definitive Merger Agreement to Acquire North Pittsburgh Systems, Inc. for $375.1 Million

    MATTOON, Ill. and GIBSONIA, Pa., July 2 /PRNewswire-FirstCall/ --
 Consolidated Communications Holdings, Inc. ( CNSL) announced today
 that it has entered into a definitive agreement to acquire North Pittsburgh
 Systems, Inc. ( NPSI) for $25 per share in a taxable cash and stock
 transaction with a total consideration of $375.1 million, based on
 Consolidated's June 29, 2007 closing price. This represents a 17.6 percent
 premium over North Pittsburgh's closing price on June 29, 2007. North
 Pittsburgh shareholders may elect to exchange each share of North
 Pittsburgh common stock for either $25 in cash or 1.1061947 shares of
 Consolidated common stock, subject to proration so that 80 percent of the
 North Pittsburgh shares will be exchanged for cash and 20 percent for
 stock. The share exchange ratio is fixed and is not subject to any collars.
     Consolidated intends to finance the cash portion of the purchase price
 with debt and cash on hand. Consolidated has obtained a commitment for the
 financing necessary to complete the transaction from Wachovia Bank, N.A.
 Wachovia Securities is also Consolidated's financial advisor on this
 transaction and has rendered a fairness opinion in connection with the
 transaction to the Board of Directors of Consolidated.
     On a pro forma basis, for the twelve months ending March 31, 2007, the
 combined company would have had revenues of approximately $425.5 million,
 293,400 ILEC access lines, 66,300 CLEC access line equivalents, 72,200 DSL
 subscribers and 1,400 employees.
     "The North Pittsburgh team has established a strong reputation with its
 customers and in the communities it serves," said Bob Currey,
 Consolidated's president and chief executive officer. "North Pittsburgh
 delivers an attractive market, a strong network, and a history of success,
 providing a solid foundation on which we can build. Consolidated has a
 proven track record of combining telecommunications properties and
 achieving efficiencies for the combined company. We believe North
 Pittsburgh will be an excellent complement to our Illinois and Texas
 operations."
     "For the past 101 years, we have focused on building a high quality
 integrated telecommunications business in Western Pennsylvania," said Harry
 Brown, president and chief executive officer. "Consolidated is a leader in
 delivering innovative products, such as IPTV, to its markets and we believe
 this merger provides an exciting opportunity to expand upon our existing
 offerings. In addition, we are confident Consolidated's customer focus will
 benefit both our customers and shareholders."
     The acquisition is not subject to a financing condition and is expected
 to close either in the fourth quarter of 2007 or first quarter of 2008,
 subject to certain customary conditions, including approvals from federal
 and state regulators and North Pittsburgh's shareholders. North Pittsburgh
 will pay its regular July dividend and expects to pay its regular dividend
 in October, but has agreed not to pay further dividends. North Pittsburgh
 expects to call a shareholders meeting for Fall 2007, at which this
 transaction will be submitted to North Pittsburgh's shareholders for
 approval and the company will hold its 2007 annual meeting for the election
 of directors and other matters. Approval by Consolidated's shareholders is
 not required.
     Strategic Rationale
     With the acquisition of North Pittsburgh, Consolidated adds growing,
 affluent markets that are supported by an advanced network. The network can
 be leveraged to increase the penetration of broadband products and, with
 limited capital investment, to rollout video service. Approximately 99
 percent of North Pittsburgh access lines are currently DSL capable and
 Consolidated expects to launch its video product in the Western
 Pennsylvania markets in 2008. Upon close of the transaction, Consolidated
 expects to realize both annual operating and capital synergies. Operating
 synergies are estimated at approximately $7.0 million in 2008 and
 approximately $11.0 million in 2009 and beyond. Capital synergies are
 estimated at approximately $3.0 million in 2008 and $6.0 million in 2009
 and beyond. In addition, Consolidated estimates the transaction will be
 accretive to cash flow by approximately 6.0 percent (which Consolidated
 tracks as cash available to pay dividends), after synergies, in the first
 full year of operations.
     North Pittsburgh Operating Statistics at March 31, 2007
     -- ILEC lines were 61,500.
     -- CLEC access line equivalents were 66,300.
     -- DSL subscribers were 16,300.
     Conference Call Information
     Consolidated will host a conference call today, July 2, 2007 at 10:00
 a.m. Central Time to discuss the acquisition. The call is being webcast and
 both the slides and webcast can be accessed from the "Investor Relations"
 section of the company's website at http://www.consolidated.com. The
 webcast will also be archived on the company's website. If you do not have
 internet access, the conference call dial-in number is 1-800-642-1783.
 International parties can access the call by dialing 1-706-679-5600. A
 telephonic replay of the conference call will also be available starting
 two hours after completion of the call until July 5, 2007 at midnight
 Eastern Time. To hear the replay, parties in the United States and Canada
 should call 1-800-642-1687 and international parties should call
 1-706-645-9291 and enter pass code 5047553.
     Other Information
     Evercore Group L.L.C. is North Pittsburgh's financial advisor and
 rendered a fairness opinion to North Pittsburgh. Hughes Hubbard & Reed LLP
 and Thomas, Thomas, Armstrong & Niesen acted as legal counsel to North
 Pittsburgh. Schiff Hardin LLP acted as legal counsel to Consolidated.
     Safe Harbor
     Any statements other than statements of historical fact, including
 statements about management's beliefs and expectations, are forward-looking
 statements and should be evaluated as such. These statements are made on
 the basis of management's views and assumptions regarding future events and
 business performance. Words such as "estimate," "believe," "anticipate,"
 "expect," and similar expressions are intended to identify forward-looking
 statements. Forward-looking statements (including oral representations)
 involve risks and uncertainties that may cause actual results to differ
 materially from any future results, performance or achievements expressed
 or implied by such statements. These risks and uncertainties include
 Consolidated's ability to complete the acquisition, successfully integrate
 North Pittsburgh's operations and realize the synergies from the
 acquisition, as well as a number of other factors related to the businesses
 of Consolidated and North Pittsburgh, including various risks to
 shareholders of not receiving dividends and risks to Consolidated's ability
 to pursue growth opportunities if Consolidated continues to pay dividends
 according to the current dividend policy; various risks to the price and
 volatility of Consolidated's common stock; the substantial amount of debt
 and Consolidated's ability to incur additional debt in the future;
 Consolidated's need for a significant amount of cash to service and repay
 the debt and to pay dividends on the common stock; restrictions contained
 in the debt agreements that limit the discretion of management in operating
 the business; the ability to refinance the existing debt as necessary;
 regulatory changes, rapid development and introduction of new technologies
 and intense competition in the telecommunications industry; risks
 associated with Consolidated's possible pursuit of acquisitions; economic
 conditions in the Consolidated and North Pittsburgh service areas in
 Illinois, Texas and Pennsylvania; system failures; losses of large
 customers or government contracts; risks associated with the rights-of-way
 for the network; disruptions in the relationship with third party vendors;
 losses of key management personnel and the inability to attract and retain
 highly qualified management and personnel in the future; changes in the
 extensive governmental legislation and regulations governing
 telecommunications providers and the provision of telecommunications
 services; telecommunications carriers disputing and/or avoiding their
 obligations to pay network access charges for use of Consolidated's
 network; high costs of regulatory compliance; the competitive impact of
 legislation and regulatory changes in the telecommunications industry; and
 liability and compliance costs regarding environmental regulations. These
 and other risks and uncertainties are discussed in more detail in
 Consolidated's and North Pittsburgh's filings with the Securities and
 Exchange Commission, including our respective reports on Form 10-K and Form
 10-Q.
     Many of these risks are beyond management's ability to control or
 predict. All forward-looking statements attributable to Consolidated, North
 Pittsburgh or persons acting on behalf of them are expressly qualified in
 their entirety by the cautionary statements and risk factors contained in
 this press release and the companies' filings with the Securities and
 Exchange Commission. Because of these risks, uncertainties and assumptions,
 you should not place undue reliance on these forward-looking statements.
 Furthermore, forward- looking statements speak only as of the date they are
 made. Except as required under the federal securities laws or the rules and
 regulations of the Securities and Exchange Commission, Consolidated and
 North Pittsburgh do not undertake any obligation to update or review any
 forward-looking information, whether as a result of new information, future
 events or otherwise.
     Prospectus/Proxy Statement
     This material is not a substitute for the prospectus/proxy statement
 Consolidated Communications Holdings, Inc and North Pittsburgh Systems,
 Inc. will file with the Securities and Exchange Commission. Investors are
 urged to read the prospectus/proxy statement, which will contain important
 information, including detailed risk factors, when it becomes available.
 The prospectus/proxy statement and other documents which will be filed by
 Consolidated Communications Holdings, Inc. and North Pittsburgh Systems,
 Inc. with the Securities and Exchange Commission will be available free of
 charge at the SEC's website, www.sec.gov, or by directing a request when
 such a filing is made to Consolidated Communications, 121 South 17th
 Street, Mattoon, IL 61938, Attention: Investor Relations; or to North
 Pittsburgh Systems, Inc., 4008 Gibsonia Road, Gibsonia, Pennsylvania 15044,
 Attention: Investor Relations. The final prospectus/proxy statement will be
 mailed to shareholders of North Pittsburgh Systems, Inc.
     This communication shall not constitute an offer to sell or the
 solicitation of an offer to buy securities, nor shall there be any sale of
 securities in any jurisdiction in which such offer, solicitation or sale
 would be unlawful prior to registration or qualification under the
 securities laws of such jurisdiction.
     Proxy Solicitation
     Consolidated Communications Holdings, Inc and North Pittsburgh Systems,
 Inc., and certain of their respective directors, executive officers and
 other members of management and employees are participants in the
 solicitation of proxies in connection with the proposed transactions.
 Information about the directors and executive officers of Consolidated
 Communications Holdings, Inc. is set forth in the proxy statement for
 Consolidated Communications Holdings, Inc.'s 2007 annual meeting of
 shareholders. Information about the directors and executive officers of
 North Pittsburgh Systems, Inc. is set forth in the company's Annual Report
 on Form 10-K for the year ended December 31, 2006, as amended. Investors
 may obtain additional information regarding the interests of such
 participants in the proposed transactions by reading the prospectus/proxy
 statement for such proposed transactions when it becomes available.
     About Consolidated Communications Holdings, Inc.
     For more information please visit http://ir.consolidated.com.
 
     About North Pittsburgh Systems, Inc.
     For more information please visit
 http://www.northpittsburgh.com/relations.asp.
 
      Consolidated Contact:                  North Pittsburgh Contact:
      Stephen Jones                          Allen Kimble
      Vice President - Investor Relations    Senior Vice President
      217-258-9522                           724-443-9583
      investor.relations@consolidated.com
 
 

SOURCE Consolidated Communications Holdings, Inc.