|
[Page 1]
Management cool to sale of North State
by Paul Johnson
March 31, 2010
HIGH POINT – The management of North State
Telecommunications Corp., locally owned for more than 100 years, isn’t
supporting a suggestion by a shareholder that North State consider a
sale of the company.
North State shareholders recently received a letter from Leeward
Investments, general partner of a California-based hedge fund, Leeward
Capital. Leeward suggests to fellow shareholders and the board of
directors that they consider seeking a sale of North State, founded in
1895 by High Point-area businessmen as a local phone exchange.
“The forces driving change and consolidation within the
telecommunications industry will not relent. We believe that the best
way to serve all of North State’s constituents over a long horizon would
be to proactively and thoughtfully consider a sale of the company,”
Leeward Investments Manager Kent Rowett wrote in a letter to North State
management.
In a March 19 response letter, North State Chairman and Chief Executive
Officer C. Hayden McKenzie said a sale of the company wouldn’t be in the
best long-term interest of North State.
“Leeward Investments is in the process of winding down and terminating
their hedge fund, and we believe the principals have a short-term
perspective in regard to their North State stock,” McKenzie responded in
his letter.
McKenzie told The High Point Enterprise there are no prospective buyers
making active bids for North State.
“We’ve over the years gotten several inquiries, not formal offers,” he
said this week.
Since the Leeward letter reached shareholders earlier this year,
McKenzie said the reaction he’s received from stockholders supports the
position of the board of directors.
In his letter, McKenzie indicated that North State “has consistently
paid dividends for 84 consecutive years.” The company’s board and
management have taken steps in recent years to ensure that North State
will prosper and grow in the modern telecommunications field, McKenzie
said in his letter.
“(North State) has an extremely strong balance sheet with no debt, which
has allowed the company to make the broadband technology investments
necessary to be highly competitive,” McKenzie wrote.
pjohnson@hpe.com | 888-3528
[Page 2]
North State minority shareholder makes case
for sale
by Paul Johnson
March 31, 2010
HIGH POINT – North State Telecommunications
Corp. shareholders and management should act sooner rather than later to
get the best price in any sale of the High Point-based business, a
minority shareholder contends in making its case for a sale.
Leeward Investments, based in Larkspur, Calif., earlier this year sent a
letter to North State shareholders outlining why it believes a sale is in
the best interests of the more than 100-year-old company founded in High
Point.
“The competitive and technological forces driving consolidation within the
(telecommunications) industry are larger than North State’s capacity to
adapt and respond,” writes Kent Rowett, manager of Leeward Investments.
The trend toward consolidation among businesses in the industry likely
will result in fewer potential buyers for North State in coming years,
Rowett argues.
“A less competitive auction process, coupled with reduced future cash
flows, may well lead to a disappointing sale process for the company if
action is delayed even for just a few years,” Rowett writes in the letter
to shareholders.
Rowett told The High Point Enterprise Tuesday that Lewitt Investments
isn’t seeking short-term gains with its North State holdings and doesn’t
expect any sale “to happen overnight.” As a first step, Rowett said he
would like the board of directors to ask an independent third-party to
evaluate the ramifications of a sale.
Given acquisitions in recent years in the telecommunications industry,
Rowett said he believes active bidders for North State would emerge.
“There would be at least a few interested parties in North State. There
aren’t many independent telecommunications companies left,” Rowett said.
pjohnson@hpe.com | 888-3528
At a glance
----
North State Telecommunications Corp. began as the High Point Telephone
Exchange, set up by local businessmen in 1895. The exchange was bought by
J.F. Hayden in 1899, and by 1905 the name of the business was changed to
North State Telephone Co.
The company grew during the 20th century, in part through acquisitions of
neighboring telephone services. Today, North State is one of the nation’s
20 largest integrated communications companies, offering wireless,
broadband Internet, voice services and digital television services in the
Piedmont.
|
The High Point
Enterprise, 210 Church Avenue,
High Point, NC 27262 • 336-888-3500 |
|
|