PAETEC: Many Employees Anxiously Awaiting Job Cuts

By Josh Long

The merger between Windstream Corp. and PAETEC Holding Corp. will create a company with a combined workforce of roughly 15,000 employees.

But that number is likely to shrink as Windstream integrates PAETEC into its operations.

“It’s an anxious time” for many employees at PAETEC, PAETEC Chief Executive Arunas Chesonis told about 150 people at Roberts Wesleyan College’s Leadership Breakfast, the Rochester, N.Y.-based Democrat and Chronicle reported. “It’s especially anxious in middle management.”

Last week, stockholders of PAETEC approved the proposed merger with Windstream, moving closer to finalizing the deal by the end of the year. The Federal Communications Commission and some state regulatory agencies must still approve the deal.

As of June 30, 2011, PAETEC had 4,900 full-time employees, none of whom was covered by a collective bargaining agreement, according to a regulatory filing. Windstream had about 10,000 employees at the time it announced an agreement over the summer to acquire PAETEC by issuing roughly 73 million shares of stock valued at $891 million and assuming or refinancing $1.4 billion in debt.

The deal will create a company with combined 2010 revenues of $5.3 billion, but not all employees will benefit from the merger. One group of employees  back-office administrative workers in such functions as marketing and finance  will certainly fall victim to job cuts as Windstream consolidates those functions within its own, the Democrat and Chronicle cited Chesonis.

“A lot of those departments lose a lot of people in something like this,” he said. “We know because we’ve bought 14 companies over the years.”

Asked about planned job cuts, Windstream spokesman David Avery told Channel Partners, “We are still finalizing staffing levels for the combined company as part of the integration planning process.”

Little Rock, Ark.-based Windstream expects its acquisition of Fairport, N.Y.-based PAETEC to yield roughly $100 million in annual pre-tax operating cost synergies and tax benefits, and the company anticipates incurring roughly $50 million in merger and integration costs in the first year following closing of the merger.