GERRY, FRIEND & SAPRONOV, LLP ATTORNEYS AT LAW SUITE 1450 THREE RAVINIA DRIVE ATLANTA, GEORGIA 30346-2117 - (770)399-9500 FACSIMILE (770)395-0000 EMAIL: [email protected] August 22,2000 VIA OVERNIGHT DELIVERY Florida Public Service Commission Division of Records and Reporting 2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850 Re: Joint Application of Citizens Communications Company, Frontier Communications of the South, Inc. and Frontier Communications of America, Inc. for Approval of a Transfer of Control (the "Application") . Dear Sir or Madam: Enclosed are the original and seven (7) copies ofthe Application. Please file the Application in your usual fashion arid return one (1) file-stamped copy to us'in the enclosed envelope. If you have any questions or comments, please call the undersigned. Charles A. Hudak CAH/jh Enc . cc: Citizens Commiinications Company (with enc1osure)i Global Crossing, North America, Inc. (with enc1osure)i BEFORE! THE FLORIDA PUBLIC SERVICE COMMISSION IN RE: 1 JOINT APPLICATION OF CITIZENS COMMUNICATIONS ) DOCKET NO. COMPANY, FRONTIER COMMUNICATIONS OF THE SOUTH, INC. AND FR.ONTIER COMMUNICATIONS OF oaac,a---jF OF AMERICA, INC. FOR APPROVAL OF A TRANSFER OF CONTROL ) JOINT APPLICATION COME NOW, Citizens Communications Company (“Citizens”), Frontier Communications of the South, Inc. and Frontier Communications of America, Inc. (“FCA”) (the Frontier entities are collectively referred to as the “Frontier Subsidiaries”), pursuant to Section 364.33 of the Florida Statutes, and hereby file this Joint Application with the Florida Public Service Commission (the “Commission”), requesting approval of the acquisition of all of the stock of the Frontier Subsidiaries’ corporate parent company, Frontier Subsidiary Telco Inc. (“Frontier”), by Citizens. This request is being made as a result of the execution, on July 11, 2000, of a Stock Purchase Agreement (the “Agreement”) by and among Global Crossing, Ltd. (“Global Crossing”) (the ultimate corporate parent of Frontier and the Frontier Subsidiaries), Global Crossing North America, Inc. (“Global N.A.”) (an intermediate holding company that directly owns Frontier and indirectly owns the Frontier Subsidiaries), and Citizens pursuant to which Citizens will indirectly acquire the stock of the Frontier Subsidiaries.’ That is, pursuant to the Agreement, the Frontier Subsidiaries’ corporate parent, Frontier, will become a wholly-owned, direct subsidiary of Citizens. There will be no assignment of the Certificates of Authority or of the tariffs of the Frontier Subsidiaries, which will retain the same corporate relationships with Frontier as they did prior to the stock transfer. Citizens and the Frontier Subsidiaries submit the following information to the Commission in support of the Joint Application. I. INTRODUCTION Citizens is a fast growing, community based utility service provider that is focused upon acquiring and operating telecommunications companies in small and medium-sized markets. Frontier is a well-established telecommunications company that has transformed itself into a major player across the country in many sectors of the United States telecommunications market, including the long distance, local exchange, and Internet services markets.’ Together, the two companies will enhance the range of telecommunications services and choices available to their customers more rapidly than either company could do so independently. Moreover, the resulting entity will be focused upon the local exchange business to the benefit of local customers. 1 Organizational charts of the current and proposed ownership of Frontier are attached hereto at Exhibit UA.99 2 Last year, the Frontier Subsidiaries were included among the Joint Applicants in the acquisition of all of the stock of their then parent corporation, Frontier Corporation, by Global Crossing, Ltd. See Request for approval of merger agreement whereby Global Crossing Ltd. will acquire control of Frontier Corporation and, indirectly, its communications operating subsidiaries, Frontier Communications of the South, Inc. (LEC Cert. Nos. 5 and 6), Allnet Communications Services d/b/a Frontier Communications (IXC Cert. No. 3955), Budget Call Long Distance, Inc. (IXC Cert. No. 3955), Frontier Communications International, Inc. (IXC Cert. No. 3558), Frontier Communications of the West, Inc. (IXC Cert. No. 3487), Frontier Local Services Inc. (ALEC Cert. No. 5574), and Frontier Telemanagement Inc. (ALEC Cert. No. 5308), Order Approving Merger Agreement, Docket No. 990555- TP (issued Aug. 3, 1999). 2 11. DESCRIPTION OF THE COMPANIES A. Citizens Communications Company Citizens is a diversified public utility that, through its various operating divisions or subsidiaries, currently provides telecommunications, electric, gas, water, and wastewater services to approximately two (2) million customers in twenty-two (22) states. The company recently decided to focus its business operations upon telecommunications, and, accordingly, is in the process of selling its public utilities businesses. Citizens provides both regulated and competitive telecommunications services to residential, business, and wholesale customers. Through various of its subsidiaries, Citizens currently operates as an incumbent local exchange carrier (“ILEC”) in fourteen (14) states and provides local and long-distance services to more than one million access lines. Citizens also owns 83% of the outstanding common stock of Electric Lightwave, Inc., a leading full-service, facilities-based, competitive local exchange carrier that is authorized to provide long distance resale services in FloridaY3and 100% of the outstanding common stock of Citizens Telecommunications Company, Inc., a telecommunications carrier that is authorized to provide long distance resale services in F10rida.~ As stated previously, Citizens has determined that it will now focus its business on acquiring and operating telecommunications businesses in small and medium-sized cities and towns that are experiencing above-average economic and population growth. To that end, in May 1999 Citizens entered into a series of definitive agreements with GTE Corporation to 3 Application of Electric Lightwave, Inc. for a Certificate to Provide Interexchange Telecommunications Services, Order Granting Certificate to Provide Interexchange Telecommunications Service, Certificate No. 4766, Docket No. 961050-TI (granted Feb. 13, 1997). 4 Application of Citizens Telecommunications Company, Inc. for a Certificate to Provide Interexchange Telecommunications Services, Order Granting Certificate to Provide Interexchange Telecommunications Service, Certificate No. 4465, as amended, Docket No. 970491-TI (issued July 23, 1996). 3 acquire approximately 367,000 telephone access lines. Thereafter, in June 1999, Citizens and US WEST Communications, Inc., announced that they had entered into a series of definitive agreements for Citizens to purchase local-exchange telephone properties serving approximately 545,000 telephone access lines in eleven (11) states. Finally, in July 2000, Citizens, Global Crossing, and Global N.A. entered into a definitive stock purchase agreement whereby Citizens will acquire approximately 1.1 million additional access lines in thirteen (13) states. When all of the pending transactions are consummated, Citizens will serve more than three (3) million access lines in a service territory encompassing thirty (30) states. Citizens has a strong income statement and balance sheet and is financially qualified to complete all of its pending acquisitions and to operate the acquired properties in a manner that is consistent with the public interest. A copy of Citizens’ most recent Form 10-K, as filed with the Securities and Exchange Commission, is attached hereto at Exhibit “B.” Citizens expects to temporarily fund these transactions with either cash and investment balances or bank credit facilities. Permanent funding is expected from the proceeds from the sale or other disposition of Citizens’ gas, electric and water properties and the issuance of new debt and preferred stock. Citizens has, and expects to maintain, a debt rating exceeding Global Crossing’s current rating. B. Frontier Subsidiary Telco, Inc. Through its various operating subsidiaries, Frontier operates as an ILEC in thirteen (13) states, including Florida.’ Taken together, Frontier’s thirty-three (33) local telephone companies serve more than one million local access lines. In addition, Frontier’s subsidiary, FCA, is in the 5 Frontier has one (1) ILEC subsidiary that provides service in Florida: Frontier Communications of the South, Inc. 4 process of obtaining certification to provide long distance and alternative local exchange services in all thirteen (13) states (including Florida) in which Frontier’s ILECs operate. C. Designated Contacts The designated contacts for questions and correspondence concerning this Joint Application are: For Citizens: L. Russell Mitten Vice President and General Counsel Citizens Communications Company 3 High Ridge Park Stamford, Connecticut 06905 (203) 614-5047 (Tel) (203) 614-465 1 (Fax) Angelo F. Rella VP - State Government Affairs - East Citizens Communications Company 137 Harrison Street Johnstown, NY 12095 (5 18) 773-6777 (Phone) (518) 773-8814 (Fax) For Frontier: Martin T. McCue Michael J. Shortley, I11 Frontier Subsidiary Telco Inc. 180 South Clinton Avenue Rochester, New York 14646 (716) 777-1028 (Tel) (716) 546-7823 (Fax) 6 Application of Frontier Communications of America, Inc. for a Certificate