Will PAETEC headquarters still move downtown after the sale? | Business
Rochester's Midtown re-development project may have suffered a big setback. PAETEC -- which was supposed to anchor the block with a brand new headquarters -- has been sold.
The company was bought by a phone company based in Little Rock, Arkansas. Under the deal, Windstream Corporation will buy PAETEC for about $891-million in stock.
The new, combined company will have more than $6-billion dollars in annual revenue. The deal has been approved by both companies and should close within six months.
Paetec wanting to build its new headquarters at the Midtown site was the catalyst for leveraging $55 million in state money to tear Midtown Plaza down.
Today at City Hall -- there seemed to be genuine surprise about the PAETEC sale to Windstream and uncertainty about what will happen here at Clinton and Main.
Mayor Richards admitted he was still in the dark about the future of the deal former mayor Bob Duffy struck with Arunas Chesonis last December -- to build a new headquarters at Main and Clinton.
Richards says right now the new company has to honor PAETEC's obligations and continue to try to convince the people in Arkansas that this is the right thing to do.
The Mayor said Midtown Plaza was no longer viable after Chase Bank moved its large operation out. “We will be in a better position with respect to Midtown and downtown if PAETEC comes or goes. Now it's not my plan for them to go. But that is where we are.”
On local radio today, Chesonis was asked -- what about those who say it's a lot less likely there would be a new downtown building built? “Well, I think that's a real fair comment. Their headquarters is in Arkansas. But they really like the team up here. They like the staff. They're open minded. But again I think any time you have a corporate headquarters for a big company that was thinking about building downtown versus building a regional headquarters, that is never usually as high a probability. So I think people who say that are probably pretty accurate.”
George Conboy of Brighton Securities says the city made a bad deal. “The city made a deal with PAETEC to put up this headquarters downtown because the city was really desperate for development. When you make a decision in desperation, you don't always make your best decisions.”
Conboy compared the PAETEC deal to requiring someone to put a good faith earnest money deposit down on a house they want to buy. The city didn't require that and its agreement has places where PAETEC could opt out of the deal. “I think the chance of Windstream either operating a headquarters here, or moving here, are somewhere between slim and none.”
Mayor Richards says one of the first things he needs to do is contact Windstream convince them that Rochester is a place into which they should consolidate whatever efforts they have.
PAETEC is Arunas Chesonis' baby. Even the name is a combination of initials from family members and he's walking away but he's got seven-million reasons. Chesonis is PAETEC's largest shareholder.
Lieutenant Governor Bob Duffy issued a statement late Monday saying in part, "Like everyone else I learned this morning about the acquisition of Paetec by Windstream. I have spoken with Paetec CEO Arunas Chesonis and many decisions regarding the company's fate, including Midtown are three to four months away. There are many uncertainties at this time and it is premature to say if this will be a positive or negative event for the Rochester area."