M/C Venture Partners Scores Exit On Cavalier Telephone Corp.

PAETEC Holding Corp. said it has agreed to acquire Cavalier Telephone Corp. from M/C Venture Partners in an all-cash deal valued at $460 million. The transaction would give the provider of local communications services approximately 17,000 additional fiber-route miles. Together the combined company would have generated about $381 million in adjusted EBITDA on $1.95 billion in revenue for the 12 months ended June 30, including $30 million in expected future cost savings.


PAETEC Holding Corp. (NASDAQ GS: PAET) today announced that it has signed a
definitive merger agreement to acquire Cavalier Telephone Corporation in an
all-cash $460 million transaction. Cavalier is a privately held company whose
majority owner is M/C Venture Partners, a private equity firm based in Boston.

The acquisition will add nearly 17,000 fiber-route miles to PAETEC`s existing
service footprint, allowing the company to offer an alternative for last-mile
connectivity to customers and reduce overall expenses through improved
cost-structures and network grooming. The transaction will further solidify
PAETEC as one of the largest competitive local communication service providers
in the United States as measured by revenue, adjusted EBITDA* and free cash
flow* for the twelve months ended June 30, 2010.

Cavalier`s wholly owned subsidiary, Intellifiber Networks, is one of the largest
network providers in the nation with a high capacity fiber network spanning
nearly 17,000 route miles and representing over $2 billion of investment. The
expansive 12,262 route mile intercity network spans the Midwest and Eastern
U.S., as well as 4,689 route miles throughout several existing PAETEC metro
areas, allowing for broad connectivity options for customers. Intellifiber
offers scalable network solutions for service provider, enterprise, and
government customers including private networks, low latency routing, SONET
services, wavelengths, Ethernet, and data options.

The combined company would have generated approximately $1.950 billion in
revenue and $381 million in adjusted EBITDA for the twelve months ended June 30,
2010 on a pro forma basis, including $30 million in expected run-rate synergies
in year two and annually thereafter. After the closing of this transaction,

PAETEC expects to have a local presence in 86 of the top 100 Metropolitan
Statistical Areas (MSAs) and a presence in 1,178 collocations, or an increase in
collocations of 95% as a result of the acquisition.

“This planned acquisition of Cavalier fits our strategic plan to add both fiber
assets and regional density to better serve our customers and realize increased
network synergies, both in the local loop and long haul,” said Arunas A.
Chesonis, chairman and chief executive officer of PAETEC. “Cavalier`s fiber
infrastructure, network assets and corporate culture make it a perfect match for
PAETEC and dramatically strengthen the company in the Eastern United States.”

“This is a major milestone in the Cavalier story. Our future has never looked
brighter,” said Danny Bottoms, president & CEO of Cavalier. “This transaction
will soon enable us to take advantage of a combined network and resources that
are unmatched in the industry, and build upon a common culture that is
singularly focused on the customer.”

* Neither adjusted EBITDA nor free cash flow is a measurement of financial
performance under accounting principles generally accepted in the United States,
or “GAAP.” Adjusted EBITDA, as defined by PAETEC for the periods presented,
represents net loss before depreciation and amortization, interest expense,
benefit from income taxes, stock-based compensation, debt extinguishment and
related costs, sales and use tax settlement, gain on non-monetary transaction,
and other non-operating income. Free cash flow, as defined by PAETEC, consists
of adjusted EBITDA less capital expenditures (purchases of property and
equipment). See the accompanying tables for a quantitative reconciliation of
adjusted EBITDA to net loss, as net loss is calculated in accordance with GAAP.

Transaction Terms and Structure

Under the terms of the merger agreement, which was approved by the boards of
directors of both companies, Cavalier will become an indirect wholly-owned
subsidiary of PAETEC Holding Corp. Subsequent to the entry of Cavalier and
PAETEC into the merger agreement, Cavalier received written consents evidencing
the requisite approval and adoption of the merger agreement by Cavalier security
holders in accordance with applicable law. Neither the merger agreement nor the
merger is subject to the approval of PAETEC`s stockholders.

The transaction is subject to the expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino AntiTrust Improvements Act of 1976,
approvals by the FCC and state public service commissions in the states where
the combined company will operate, and other customary closing conditions. The
companies expect that the transaction will close within four to six months.

Concurrent with the execution of the merger agreement, PAETEC entered into a
financing commitment letter with Deutsche Bank AG Cayman Islands Branch,
Deutsche Bank Securities Inc., Banc of America Bridge LLC, and Banc of America
Securities LLC, pursuant to which these parties committed to provide $420
million in financing for this leverage neutral transaction. PAETEC’s ratio of
net-debt to LTM adjusted EBITDA will continue at the relatively constant level
of 3.4x. Cavalier`s outstanding net indebtedness of approximately $336 million
will be repaid at closing.

“This transaction offers clear shareholder and customer benefits by increasing
the scale of our business and creating a significant operating synergy
opportunity without materially changing our capital structure,” said Keith
Wilson, chief financial officer of PAETEC.

Company Leadership and Headquarters

After the closing, Arunas A. Chesonis will remain Chairman and Chief Executive
Officer and Keith Wilson as Chief Financial Officer of the combined company.
Current Cavalier President and CEO, Danny Bottoms, plans to join PAETEC`s
executive team. PAETEC will continue to be headquartered in Fairport, New York,
and will maintain Cavalier`s operations in Richmond, Virginia along with
PAETEC`s significant regional centers, including Charlotte, North Carolina and
Cedar Rapids, Iowa.

Additional information about the transaction will be contained in PAETEC`s
Current Report on Form 8-K to be filed with the SEC.


Deutsche Bank Securities Inc. and BofA Merrill Lynch are acting as financial
advisors to PAETEC and Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates is
acting as M&A counsel to PAETEC and Hogan Lovells US LLP is acting as counsel on
PAETEC`s anticipated financing. Evercore Partners is acting as financial
advisors and Edwards Angell Palmer & Dodge LLP is acting as legal advisor for

Conference Call

PAETEC will host a conference call with the investment community today at 9:00
a.m. ET. PAETEC Chairman and CEO Arunas A. Chesonis and Chief Financial Officer
Keith Wilson will be participating, along with Cavalier Telephone President and
CEO Danny Bottoms.

Conference Call details are as follows:
Call Date: Monday, Sept. 13, 2010
Call Time: 9:00 a.m. ET
US/Canada Dial in: 800.510.9691
International: 617.614.3453
Passcode: 54661647
Audio Webcast:

Replay details are as follows:
Replay Dates: Sept. 13, 2010, 12:00 p.m. ET through Sept 27, 2010
US/Canada Replay Dial in: 888.286.8010
International Replay Dial in: 617.801.6888
Replay Passcode: 22689896
Replay Webcast:

Supplemental Information

A supplemental presentation of information complementary to the information
presented in this release and that will be discussed on the conference call will
be made available on the Investor Relations portion of www.paetec.com prior to
the conference call.


PAETEC (NASDAQ GS: PAET) is personalizing business communications for
medium-sized and large businesses, enterprise organizations, and institutions
across the United States. PAETEC offers a comprehensive suite of IP, voice, data
and Internet services, as well as enterprise communications management software,
network security solutions, CPE, and managed services. For more information,
visit www.paetec.com.

About Cavalier

Cavalier, headquartered in Virginia, is a full-service provider of reliable and
efficient telecommunications solutions for business, consumer, and government
customers. Using its owned and operated fiber optic network, the company serves
hundreds of thousands of customers throughout the eastern United States. From
landline voice to managed network services, customers depend on Cavalier for a
wide range of communications products that drive their businesses and simplify
their lives. Cavalier strives to combine technology with customer commitment to
deliver the best value available. For more information, please visit

About M/C Venture Partners

M/C Venture Partners is a venture capital firm focused exclusively on the
communications, media and information technology sectors. The firm has invested
over $1.5 billion into nearly 100 companies in those sectors and has a long
track record of success. M/C Venture Partners has offices in Boston, San
Francisco and London.

Forward-Looking Statements

Except for statements that present historical facts, this release contains
“forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In some
cases, you can identify these statements by such forward-looking words as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“potential,” “should,” “will” and “would,” or similar expressions. These
statements include pro forma financial information and related forecasts of
merger-related synergies and of the combined company`s total revenue, adjusted
EBITDA, and other financial results, and reflect PAETEC`s preliminary estimates
based on current information and assumptions. These statements represent
PAETEC`s judgment only as of the date of this presentation. Forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause PAETEC`s actual operating results, financial position, levels of
activity or performance to be materially different from those expressed or
implied by such forward-looking statements. Some of these risks, uncertainties
and factors are discussed under the caption “Risk Factors” in PAETEC`s 2009
Annual Report on Form 10-K and in PAETEC`s subsequently filed SEC reports. They
include, but are not limited to, the following risks, uncertainties and other
factors: general economic conditions and trends; the continued availability of
necessary network elements at acceptable cost from competitors; changes in
regulation and the regulatory environment; industry consolidation; PAETEC`s
ability to manage its business effectively; competition in the markets in which
PAETEC operates; failure to adapt product and service offerings to changes in
customer preferences and in technology; PAETEC`s ability to integrate the
operations of acquired businesses; PAETEC`s ability to implement its acquisition
strategy; any significant impairment of PAETEC`s goodwill; future sales of
PAETEC`s common stock in the public market and PAETEC`s ability to raise capital
in the future; interest rate risks and compliance with covenants under PAETEC`s
debt agreements; PAETEC`s ability to attract and retain qualified personnel and
sales agents; PAETEC`s failure to obtain and maintain network permits and
rights-of-way; PAETEC`s involvement in disputes and legal proceedings; PAETEC`s
ability to maintain and enhance its back office systems; and effects of network
failures, system breaches, natural catastrophes and other service interruptions.
PAETEC disclaims any obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Chris Muller, 585-340-8218
PAETEC Investors
Pete Connoy, 585-340-2649
Lou Sommi, 267-803-4244