What would it cost Alltel if it had seller's remorse?

According to documents filed with the Securities and Exchange Commission, if Alltel were to back out of its current agreement with Texas Pacific Group and an arm of Goldman Sachs, they would have to pay a $625 million termination fee. Alltel has agreed to be bought out by the partnership for $71.50/share. Shares of Alltel closed at $68.54 yesterday.

There is reason to think that Alltel might want to reconsider. Many heavy-hitting private equity firms were queuing up to make offers, including Blackstone Group and Providence Equity Partners, as well as Kohlberg Kravis Roberts and the Carlyle Group. However, Alltel agreed to the buyout before those firms had chances to make offers.

As reported in the Morning Call yesterday, Alltel Shareholder Lon Engel filed a lawsuit against Alltel, essentially saying the company jumped at the offer before it had an opportunity to potentially make more money.

Alltel Corp. said Thursday that its proposed buyout by two private-equity firms carries a $625 million termination fee.

According to a filing with the Securities and Exchange Commission, Alltel would have to pay the fee under certain circumstances, including if it enters an alternative proposal.

(Continue reading this story on MarketWatch)

Next article » House Financial Services Committee Scrutinizes Private Equity Taxation

Previous article « Murdoch Pays (Compliments)