Seeking increased growth opportunities, Citizens Utilities ofStamford, CT, is getting out of the business of distributing gas,electricity and water in order to invest in telecommunications. Thecompany is divesting its Public Services distribution businesses,as well as its wastewater treatment business. As previouslyannounced, Citizens plans to fund $2.3 billion of telephone accessline acquisitions with sale proceeds.

The telecommunications acquisitions, definitive agreements forwhich were signed in May and June, will make Citizens among thelargest telecommunications companies in the nation, with about 1.7million access lines in 21 states. The acquisitions are expected toclose in 2000.

“We believe that the significant recent demand for distributionproperties in each of our Public Services business sectors, coupledwith the high quality of Citizens’ properties, creates anoutstanding opportunity to maximize value for our securityholders,” said Robert J. DeSantis, chief financial officer.

“Our strategy is to realize the hidden value of our PublicServices properties and use the proceeds to significantly expandour telecommunications business. We expect to sell assets fordouble-digit multiples of cash flow and use the proceeds to fundassets that we have purchased for single-digit multiples of cashflow-in a business that grows twice as fast as those businesses weare divesting.

“This acquisition and divestiture process should add significantincremental EBITDA with no increase in long-term debt. Thesetransactions will clearly establish Citizens as a puretelecommunications company, focusing its expansion on a businesssector that commands higher public and private market values.”

Citizens Public Services serves about 900,000 customers in 10states. Combined Public Services revenues were about $610 millionin 1998. A company spokeswoman did not return a call for furthercomment.

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