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The High Point Enterprise (North Carolina), March 31, 2010 articles, page 1 and page 2




[Page 1]


Management cool to sale of North State

by Paul Johnson


March 31, 2010

HIGH POINT – The management of North State Telecommunications Corp., locally owned for more than 100 years, isn’t supporting a suggestion by a shareholder that North State consider a sale of the company.

North State shareholders recently received a letter from Leeward Investments, general partner of a California-based hedge fund, Leeward Capital. Leeward suggests to fellow shareholders and the board of directors that they consider seeking a sale of North State, founded in 1895 by High Point-area businessmen as a local phone exchange.

“The forces driving change and consolidation within the telecommunications industry will not relent. We believe that the best way to serve all of North State’s constituents over a long horizon would be to proactively and thoughtfully consider a sale of the company,” Leeward Investments Manager Kent Rowett wrote in a letter to North State management.

In a March 19 response letter, North State Chairman and Chief Executive Officer C. Hayden McKenzie said a sale of the company wouldn’t be in the best long-term interest of North State.

“Leeward Investments is in the process of winding down and terminating their hedge fund, and we believe the principals have a short-term perspective in regard to their North State stock,” McKenzie responded in his letter.

McKenzie told The High Point Enterprise there are no prospective buyers making active bids for North State.

“We’ve over the years gotten several inquiries, not formal offers,” he said this week.

Since the Leeward letter reached shareholders earlier this year, McKenzie said the reaction he’s received from stockholders supports the position of the board of directors.

In his letter, McKenzie indicated that North State “has consistently paid dividends for 84 consecutive years.” The company’s board and management have taken steps in recent years to ensure that North State will prosper and grow in the modern telecommunications field, McKenzie said in his letter.

“(North State) has an extremely strong balance sheet with no debt, which has allowed the company to make the broadband technology investments necessary to be highly competitive,” McKenzie wrote. | 888-3528



[Page 2]


North State minority shareholder makes case for sale

by Paul Johnson

March 31, 2010

HIGH POINT – North State Telecommunications Corp. shareholders and management should act sooner rather than later to get the best price in any sale of the High Point-based business, a minority shareholder contends in making its case for a sale.

Leeward Investments, based in Larkspur, Calif., earlier this year sent a letter to North State shareholders outlining why it believes a sale is in the best interests of the more than 100-year-old company founded in High Point.

“The competitive and technological forces driving consolidation within the (telecommunications) industry are larger than North State’s capacity to adapt and respond,” writes Kent Rowett, manager of Leeward Investments.

The trend toward consolidation among businesses in the industry likely will result in fewer potential buyers for North State in coming years, Rowett argues.

“A less competitive auction process, coupled with reduced future cash flows, may well lead to a disappointing sale process for the company if action is delayed even for just a few years,” Rowett writes in the letter to shareholders.

Rowett told The High Point Enterprise Tuesday that Lewitt Investments isn’t seeking short-term gains with its North State holdings and doesn’t expect any sale “to happen overnight.” As a first step, Rowett said he would like the board of directors to ask an independent third-party to evaluate the ramifications of a sale.

Given acquisitions in recent years in the telecommunications industry, Rowett said he believes active bidders for North State would emerge.

“There would be at least a few interested parties in North State. There aren’t many independent telecommunications companies left,” Rowett said. | 888-3528

At a glance


North State Telecommunications Corp. began as the High Point Telephone Exchange, set up by local businessmen in 1895. The exchange was bought by J.F. Hayden in 1899, and by 1905 the name of the business was changed to North State Telephone Co.

The company grew during the 20th century, in part through acquisitions of neighboring telephone services. Today, North State is one of the nation’s 20 largest integrated communications companies, offering wireless, broadband Internet, voice services and digital television services in the Piedmont.



The High Point Enterprise, 210 Church Avenue,
High Point, NC 27262 • 336-888-3500



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