PaeTec Communications Raises $28M

Soliciting financing from a multitude of investors, including 125 executives from the telecommunications industry, PaeTec Communications Inc. raised $28 million in its fourth round of private equity financing.

PaeTec would not disclose the identity of the 125 individual investors, as well as the financial institutions, business partners and vendors that also contributed to the round.

“It was important to attract a network of individuals that are influential in telecommunications and finance,” said Tim Bancroft, vice president of finance. “They will help with business opportunities, joint-ventures, acquisitions and other forms of networking.”

No placement agent was used for the deal. To date, PaeTec has raised more than $46 million in private equity financing.

The Fairport, N.Y.-based company offers local, long distance, Internet, e-commerce and data services to small businesses in the Boston and Rochester markets. PaeTec will use proceeds from the investment to expand to seven additional markets, including New York and Los Angeles, before the end of the year.

Bancroft said PaeTec will also target college campuses, government agencies and other high-density, high use residential environments.

The company’s Chief Executive, Arunas Chesonis, had previously been president of long distance carrier ACC Corp., which was sold in April 1998 and subsequently acquired by AT&T Corp. Chesonis incorporated PaeTec later that year.

Bancroft said his company’s next form of financing will be through a $49 million senior debt facility, which will be completed by September. The company currently has no plans for future private equity financing.