*Pages 1--6 from Microsoft Word - 54107.doc* PUBLIC NOTICE Federal Communications Commission 445 12 th St., S. W. Washington, D. C. 20554 News Media Information 202 / 418- 0500 Internet: http:// www. fcc. gov TTY: 1- 888- 835- 5322 DA 05- 3353 Released: December 29, 2005 DOMESTIC SECTION 214 APPLICATIONS FILED FOR THE TRANSFER OF CONTROL OF VALOR COMMUNICATIONS GROUP, INC. AND ITS SUBSIDIARIES FROM VALOR COMMUNICATIONS GROUP, INC. TO NEW VALOR, AND THE TRANSFER OF CONTROL OF ALLTEL HOLDING CORP. AND IT SUBSIDIARIES FROM ALLTEL CORPORATION TO NEW VALOR NON- STREAMLINED PLEADING CYCLE ESTABLISHED WC Docket No. 05- 354 Comments Due: January 12, 2006 Reply Comments Due: January 19, 2006 On December 21, 2005, Valor Communications Group, Inc. (“ Valor”) and New Valor (“ New Valor”) (together, “Applicants”), filed an application, pursuant to sections 63.03 and 63.04 of the Commission’s rules, 1 seeking authority for the transfer of control of Valor and its subsidiaries from Valor, as presently owned, to New Valor, as it will be owned following a merger between Valor and ALLTEL Holding Corp. (“ AHC”), a wholly owned subsidiary of ALLTEL Corporation (“ ALLTEL”). Additionally, the Applicants filed pro forma transfer of control applications for approval for the transfer of control of AHC and its subsidiaries from ALLTEL to New Valor. 2 Applicants request that the Commission exercise discretion to apply the streamlined procedures to their applications, as the transactions are not entitled to presumptive streamlined treatment under section 63.03( b)( 2)( iii). 3 However, because there are a number of adjacencies between ALLTEL’s and Valor’s incumbent LEC service areas, these applications are not subject to streamlined treatment. 1 47 C. F. R. §§ 63.03, 63. 04; see 47 U. S. C. § 214. 2 Any action on this domestic section 214 application is without prejudice to Commission action on other related, pending applications. 3 See 47 C. F. R. § 63.03( b)( 2)( iii). 1 Valor, a Delaware corporation, is the holding company owner of subsidiaries that offer a number of telecommunications services, including local exchange service. Through wholly owned subsidiary holding companies, Valor holds an indirect 100 percent interest in Valor Telecommunications of Texas, L. P. (“ Valor Texas”), an incumbent local exchange carrier (“ ILEC”) that as of June 30, 2005 provides local exchange service in four states: Arkansas, New Mexico, Oklahoma, and Texas. Valor also holds an indirect 100 percent interest in Valor Telecommunications LD, LP (“ Valor LD”), which provides interexchange and resold international services in those four states. 4 Valor is also the parent company of Kerrville Communications Corp. (“ KCC”), primarily a rural ILEC in Kerrville, Texas providing a number of communications services through other subsidiaries, including local exchange service. KCC subsidiaries Advanced Tel- Com Systems, LP (“ ATS”) and Texas RSA15B2 Limited Partnership d/ b/ a Five Star Wireless (“ Five Star”) provide resold international services. KCC subsidiary KCC TelCom, Inc. d/ b/ a K2C is a competitive LEC in Bourne and Fredericksburg, Texas. ALLTEL, a Delaware corporation, is a diversified telecommunications company that is publicly traded on the New York Stock Exchange (“ NYSE”). Through its subsidiaries, ALLTEL provides wireless, local wireline telephone, long- distance, Internet, and broadband services to residential and business customers in 34 states. These services are provided in mid- sized cities and rural areas throughout much of the Southeast and portions of the Northeast, Southwest and upper Midwest. ALLTEL provides wireline service in 15 of these 34 states. 5 AHC, a wholly owned subsidiary of ALLTEL, was formed to facilitate the proposed transaction. The current ALLTEL subsidiaries that conduct the wireline business and other businesses including directory publishing operations, information services, product distribution operations, and management service (other than such operations which support ALLTEL’s wireless telecommunications business) will become subsidiaries of AHC. The ALLTEL subsidiaries offering wireless telecommunications services will not become subsidiaries of AHC. New Valor will be the same corporate entity as Valor, but likely with a new name as the surviving entity in the merger transaction. 6 Subsidiaries of New Valor will include the current subsidiaries of Valor as well as subsidiaries of AHC. These subsidiaries will continue to operate 4 Valor LD changed its corporate form from a limited liability company to a limited partnership in mid- 2003. 5 These states are: Alabama; Arkansas; Florida; Georgia, Kentucky; Mississippi; Missouri; Nebraska; North Carolina; New York; Ohio; Oklahoma; Pennsylvania; South Carolina; and Texas. ALLTEL provides local exchange service through the following entities: ALLTEL Arkansas, Inc.; ALLTEL Alabama, Inc.; ALLTEL Florida, Inc.; ALLTEL Georgia, Inc.; Georgia ALLTEL Telcom, Inc.; ALLTEL Georgia Communications Corp.; Standard Telephone Company; Accucomm; Georgia Telephone Corporation; ALLTEL Kentucky, Inc.; Kentucky ALLTEL, Inc.; ALLTEL Mississippi, Inc.; ALLTEL Missouri, Inc.; ALLTEL Nebraska, Inc.; ALLTEL New York, Inc.; ALLTEL Carolina, Inc.; ALLTEL Ohio, Inc.; Western Reserve Telephone Company; ALLTEL Oklahoma, Inc.; Oklahoma ALLTEL, Inc.; ALLTEL Pennsylvania, Inc.; ALLTEL South Carolina, Inc.; Texas ALLTEL, Inc.; and Sugar Land Telephone Company. 6 The new name, if any, has not yet been determined. 2 (likely under new names) the businesses currently operated by subsidiaries of Valor and the wireline and related businesses currently operated by subsidiaries of ALLTEL. New Valor will be a publicly traded company with no 10 percent or greater interest holders after the consummation of the transaction. The overall transaction consists of a spin- off by ALLTEL to its stockholders of ALLTEL’s wireline and certain other businesses as held by subsidiaries of AHC followed by a merger of AHC into Valor. This proposed transaction will be comprised of four distinct steps. Step 1 will involve the transfer of certain assets to the ALLTEL subsidiaries that are to become subsidiaries of AHC to effectuate the separation of ALLTEL’s wireless businesses from its wireline businesses. It is not expected that any FCC licenses will be assigned to a different licensee as part of this preliminary restructuring. Step 2 will involve the contribution/ transfer of stock of certain ALLTEL subsidiaries from ALLTEL to AHC. As a result of this transfer, the assets of ALLTEL’s wireline and certain other non- wireless businesses will be held by subsidiaries of AHC in the ALLTEL corporate structure. 7 In Step 3, ALLTEL will distribute all the shares of AHC to the ALLTEL stockholders. However, these shares of stock will be issued to a Distribution Agent for the purposes of completing the merger in Step 4. In Step 4, AHC will merge into Valor. Valor will issue approximately 400 million new shares of stock, each share of outstanding stock of AHC will be converted into 1.05 shares of stock of Valor, and the Distribution Agent will then distribute such shares of Valor stock to the stockholders of ALLTEL. Upon completion of the proposed merger, Valor will be the surviving corporation (referred to herein as New Valor), and the stockholders of ALLTEL will own 85 percent of the common stock of New Valor and the pre- merger stockholders of Valor will own 15 percent of the common stock of New Valor. 8 As a result of the overall transaction, there will be a transfer of control of AHC and its new subsidiaries from ALLTEL to New Valor. However, the existing stockholders of ALLTEL will be in control of New Valor following the completion of the proposed transaction. Therefore, there will be no substantial change in the ultimate ownership and control of AHC and its subsidiaries and the transfer of control of those entities are pro forma in nature. There will 7 In consideration for the stock of these subsidiaries, AHC will issue additional shares of AHC stock to ALLTEL, will issue notes to ALLTEL, and will pay a special cash dividend to ALLTEL. 8 As mentioned previously, the corporate name of Valor will likely be changed immediately following completion of the merger. The names of the AHC subsidiaries will also likely be changed upon completion of the merger. The initial Board of Directors of New Valor will consist of nine (9) members as follows: the Chairman of the Board of Directors of AHC; the Chief Executive Officer of AHC; six (6) persons designated by ALLTEL (at least four (4) of whom are to be “independent directors” under the rules of the NYSE); and one (1) person designed by Valor (which person is to be an “independent director” under the rules of the NYSE). These directors will serve staggered terms so that three (3) directors will be elected by the stockholders of New Valor each year going forward. 3 (4) Susan O’Connell, Policy Division, International Bureau, 445 12th Street, S. W., Room 7- B544, Washington, D. C. 20554; email: susan. o’connell@ fcc. gov; and (5) James Bird, Office of General Counsel, 445 12th Street, S. W., Room 8- C824, Washington, D. C. 20554; e- mail: james. bird@ fcc. gov. Filings and comments are also available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, S. W., Room CY- A257, Washington, D. C. 20554. They may also be purchased from the Commission’s duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, S. W., Room CY-B402, Washington, D. C. 20554, telephone: (202) 488- 5300, fax: (202) 488- 5563, or via e- mail www. bcpiweb. com. For further information, please contact Tracey Wilson- Parker at (202) 418- 1394, or Adam Kirschenbaum at (202) 418- 7280. - FCC - 6