Lightyear Becomes Public, Plans Acquisition Strategy

By Khali Henderson

Lightyear Network Solutions LLC, Louisville, Ky., announced late Friday that it has become a public company through a reverse merger with Libra Alliance Corp. (LBAL), a shell corporation and former ISP.

As a result of the transaction Lightyear, which was founded in 1993, became Libra’s principal operating company. It owns 80 percent of the company and five of the six board seats. Lightyear CEO J. Sherman Henderson will be chairman and CEO of the public company.

Henderson told PHONE+ Monday that becoming a public company gives Lightyear access to a broader investor base and capital to accelerate its growth through acquisition. He said he hopes to double the size of the company, which is about $60 million, in phase one, but he did not offer a specific timeline. Ultimately, he hopes to build the company to be $450 million through as many as six to nine acquisitions of companies in the $20 million to $80 million range.

Acquisition targets will be those serving small and midsize businesses with like or diversified product sets, he said. Lightyear’s product and service offerings include local PRI and digital T1, enhanced Internet services, frame relay, MPLS, point-to-point, VoIP, local and long-distance, calling cards and conferencing.

Henderson said the company is looking at targets with facilities and also commercial wholesale agreements. Lightyear has wholesale agreements with the ILECs for landline services and contracts with multiple wireless voice and data service providers. Lightyear built its own VoIP network in 2004.

“This gives a lot of folks a potential exit strategy that is not out there today,” Henderson said, noting the restrictive capital environment for competitive telecom service providers.

Lightyear provides services through a network of independent agents throughout the United States. Henderson said Lightyear’s increased critical mass is expected to help it to gain more attractive deals with vendors that it can pass on to its channel partners.

The former officers of Libra have resigned. In addition to Henderson as CEO, Stephen Lochmueller has been appointed as COO, Elaine G. Bush has been appointed as CFO and John J. Greive has been appointed as in-house general counsel for Libra.

Also as part of the transaction, Lightyear’s debt holders, comprised of Lightyear’s owners, released the company from approximately $26 million in short- and long-term liabilities in exchange for the issuance of 10 million restricted shares of Libra’s common stock to be issued immediately and 9.5 million restricted shares of Libra’s convertible preferred stock to be issued shortly after the closing.

“With Lightyear’s debt and interest obligations to its parent being extinguished via the exchange transaction, we believe that we are well positioned to initiate our organic and acquisition growth strategies,” Henderson said in a press statement.