Why is RCN paying a special dividend?
RCN undertook its recapitalization and return of capital initiative as a means of demonstrating its commitment to driving both short- and long-term stockholder value. The initiative translates RCN's increased financial flexibility into tangible value while preserving sufficient capacity to pursue organic and strategic growth plans. The $375 million in planned return of capital is at the mid-point of the previously stated $350-400 million range, and is comprised of $350 million in cash in the form of a $9.33 per share special dividend and an authorized $25 million in opportunistic open market share repurchases. RCN is financing this return of capital through a new senior secured credit facility, which replaces existing debt, allows for the funding of the return of capital, and yields a simplified capital structure that is fully transitioned from RCN's bankruptcy exit package and is much less restrictive than previous financing.
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Why did RCN choose to declare a special dividend and initiate a stock repurchase program?
The overwhelming majority of the return of capital is in the form of a cash dividend, which is in the previously announced range. RCN chose to set a small amount of capital aside to opportunistically repurchase some stock from time to time, based on evaluations of market conditions and other relevant factors. The size of the repurchase program is similar to many companies who announce such programs, representing up to 5% of RCN's post-dividend market cap. The repurchase program is of appropriate size to maintain a liquid public float considering that several large RCN stockholders have not contributed to trading liquidity.
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What are the record date, the pay date and the ex-date?
The record date for the special dividend is June 4, 2007. The pay date is June 11, 2007. The ex-dividend date is June 12, 2007. This is the first day on which RCN common stock will trade without rights to the dividend distribution.
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How can I get the special dividend?
RCN shareholders wishing to receive the special dividend must be a shareholder of record by the record date (June 4, 2007) and hold the stock until the ex-dividend date (June 12, 2007).
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When will the dividend appear in my account?
On or very shortly after the pay date (June 11, 2007).
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How will the special dividend be treated for United States tax purposes?
Because RCN has determined that it does not have any "accumulated earning and profits" for United States federal income tax purposes and does not expect to have taxable income for such purpose for the year ended December 31, 2007, RCN expects that the special dividend will be treated as a return of capital. In general, a return of capital will not be taxable to shareholders but will reduce the shareholder's tax basis in the shares held. The application of the United States tax law to any particular situation is complex and we urge you to discuss your
individual tax treatment of the dividend with your tax advisor.
RCN has posted through DTC a letter which outlines the US federal income tax treatment of the special dividend. Brokers may rely on this letter in making determinations with respect to withholding on the special dividend. Foreign holders should consult with their brokers and their tax advisors with respect to any withholding.
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How have outstanding Warrants been adjusted to reflect the effect of the dividend?
Pursuant to the Warrant Agreement, RCN has adjusted the Exercise Price of the Warrants held by each Warrant Holder and the number of shares of Common Stock purchasable upon exercise of each Warrant. Effective as of the close of business on June 11, 2007, the Exercise Price has been adjusted from $25.16 per Warrant to $16.72 per Warrant and the number of shares of Common Stock issuable upon exercise of each warrant has been adjusted from 42.63 to 64.14621452624 shares of Common Stock per Warrant.
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When did RCN's new stock, currently RCNI, begin trading on the Nasdaq?
RCN began trading with the ticker symbol RCNI on Monday, March 21, 2005.
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How can individual investors, financial institutions or market analysts request a meeting with members of RCN's senior management team?
Meeting requests may be sent to RCN's Investor Relations via email; requests will be handled on a case-by-case basis.
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