Rochester, N.Y. – PAETEC and Windstream have been in merger talks since at least September 2009, according to documents on file with the Securities and Exchange Commission.
Windstream, based in Little Rock, Arkansas, announced it’s buying PAETEC, creating major uncertainty for the Midtown Plaza site. PAETEC pledged to build a headquarters at Midtown in 2007, and took part in a public signing ceremony in December 2010 of a land disposition agreement.
“I don't think there was any deception by PAETEC. Acquisitions of that magnitude are fluid and take time,” said former chairman of Empire State Development Dennis Mullen, who negotiated with PAETEC about the demolition of Midtown Plaza.
In an email, a city spokesman said the city was not aware of PAETEC’s impending sale. PAETEC CEO Arunas Chesonis declined 13WHAM’s interview request Monday and Tuesday.
Windstream has not committed to carrying on with PAETEC’s headquarters plans, but has said it wants a significant presence in Rochester.
A clause in the merger agreement on file with the SEC says Windstream may not bode well for the Midtown deal. It says Windstream is not obligated to “to maintain its headquarters in a specific location or to maintain a particular level of headcount in a specific location."
Mayor Tom Richards was expected to call Windstream’s CEO Tuesday to discuss keeping jobs in Rochester and proceeding with the headquarters project. A decision is not expected for a few months. Senator Chuck Schumer said he spoke to the CEO Monday night, who did not make any promises.
Meantime, there are worries about the other two projects at the Midtown site. Christa/Morgan plan to spend $70 million to turn Midtown Tower into luxury housing. The group is awaiting financing, and it’s not clear how PAETEC’s potentially pulling out of Midtown affects the project. Representatives from the companies did not return calls for comment.
The Rochester Broadway Theatre League hopes to build a $70 million performing arts center at Midtown. But chairman Arnold Rothschild said discussions with entities about naming rights hinged on PAETEC’s viability and construction schedule.
“My first reaction was this is a very bad day for the City of Rochester,” Rothschild said. “Our plan was to be in a new performing arts center by the 2014 season and that’s kind of time-critical for us. So if in fact this project can’t move forward for whatever the reasons then we have to look at Plan B.”