4. Amendments to the Application

The assigned administrative law judge (ALJ) issued two rulings requesting further information regarding the proposed acquisition of Evans Telephone. In both rulings, the ALJ noted that the proposed stock acquisition involves a small local exchange carrier serving both small and rural communities in California where competitive options for local exchange service may not yet have developed. The rulings explained that the Commission should consider whether the proposed transaction has the potential to cause any harm to current ratepayers of Evans Telephone. In the first ruling, Applicants were directed to provide information on whether the proposed acquisition maintained or improved several aspects of Evans Telephone. The second ruling requested additional financial information from the applicants.

On December 5, 2000, Applicants filed an amendment to the application generally asserting that the proposed transaction would not have any negative impacts on any aspects of Evans Telephone identified in the ALJ ruling. Specifically, the amendment included the following assertions:

· The acquisition involves only the sale of stock of Evans Telephone and there will be no impact on the income, expense, assets, liabilities, or operations of Evans Telephone. The financial statements of Evans Telephone will be unaffected, as will its regulatory financial reporting and other requirements.

· The tariffs, customer prices, and service policies of Evans Telephone will not be affected by the change in shareholder identity.

· Country Road intends to build on the existing business relationships of Evans Communications to expand into other competitive telecommunications service offerings in the areas where Evans Communications does business. Applicants view this business opportunity as an important component of the total acquisition package.

· Country Road intends to finance the stock acquisition with a combination of $38 million in equity and $42 million in debt.

· The sale of stock of Evans Telephone will have no impact positive or negative on the quality of service to Evans Telephone customers.

· Country Road intends to retain the existing management of Evans Telephone.

· The stock acquisition will not change the status of any employees because Country Road plans to retain current management, clerical, and craft employees under current employment conditions and policies.

· All shareholders of J. H. Evans, the holding company that owns Evans Telephone, have consented to the stock acquisition.

· The stock acquisition will not reduce Evans Telephone's presence in the local economy and communities because service quality and infrastructure will be maintained.

· Country Road plans to serve nearby local communities as a competitive local exchange carrier (CLC) which applicants allege will enhance competition and expand available services to the communities and the regional economy.

In a second amendment filed on December 27, 2000, Applicants provided additional financial information requested by the ALJ including a corrected copy of the Country Road balance sheet and a copy of a bank loan commitment for $42 million in loans to finance the proposed stock acquisition.