Description of the Parties and Transaction
Evercom is authorized to operate as a nondominant reseller of interLocal Access Transport Area (LATA) and intraLATA interexchange services in California pursuant to Decision (D.) 04-05-049. Evercom provides similar services in other states and also provides interstate and international telecommunications services pursuant to authority granted by the Federal Communications Commission (FCC). The company lists Irving, Texas, as its principal place of business.
H.I.G., a Delaware limited partnership founded in 1993, holds investments in a number of businesses.1 Its limited partners include investment banks, financial institutions, pension funds, and endowments. H.I.G. is a private equity and venture capital investment firm with more than $1 billion of equity capital under its management, and has provided growth capital to a number of early stage technology companies and other businesses.
In accordance with the Agreement and Plan of Merger,2 one hundred percent of the stock of Evercom Holdings, Inc.3 (EHI) will be acquired by TZ Holdings, Inc. (TZ), a subsidiary of H.I.G. Specifically, EHI will merge with a direct subsidiary of TZ that will no longer exist upon completion of the merger. Certain existing EHI shareholders will acquire interest in TZ, but the majority interest in it will be held by another H.I.G.-controlled subsidiary.4
H.I.G. declares that its proposed acquisition of control of Evercom will occur in connection with the extension of a long-term credit facility that will both fund the proposed transaction and provide Evercom and its affiliates with refinancing of current indebtedness as well as access to significant sources of capital to meet their operating needs. This will help ensure that Evercom has both the ability to continue to provide services to its customers and to potentially enhance or expanded services. H.I.G. describes the acquisition as a promising investment opportunity that will be in furtherance of the interests of investors.
Joint Applicants contend that this transaction will not result in any immediate changes to Evercom's current operations. Instead, they assert, Evercom will continue to operate as a separate entity on a basis that is transparent to its customers, with no changes in rates, terms, or conditions of service as a result of this transfer of control.
1 On August 3, 2004, H.I.G. 2 Submitted and received, on October 19, 2004, as confidential Exhibit A. 3 Evercom's parent company. 4 H.I.G.-TNETIX, Inc. See D.04-11-004. Appended to this decision is a copy of Exhibit B, a chart showing the post-transaction ownership structure of Evercom.
