Cincinnati Bell Inc. will spin off its telephone and cable
billing arm, known as Cincinnati Bell Information Systems, as well as its Matrixx
Marketing business.
The new subsidiary will be known as Convergys Corp. The
regional Bell operating company will take Convergys public and later spin it off in a
tax-free distribution to Cincinnati Bell shareholders.
The corporation will file a registration statement in May
with the Securities and Exchange Commission for the initial public offering of Convergys.
Cincinnati Bell will likely sell 10 to 15 percent of the new company; regulations require
a sale of less than 20 percent of share in order to keep the transaction tax-free.
Cincinnati Bell's chief executive officer, John LaMacchia,
said in a prepared statement that CBIS and Matrixx would be better positioned to grow if
they were one company, "focused solely on transforming the customer knowledge they
share into competitive advantages for the client companies they serve."
CBIS does billing for 30 percent of the nation's wireless
telephony subscribers and is the No. 3 cable biller. The telephone company got into the
cable industry in the mid-1990s with the acquisition of the assets of the Information
Systems Development partnership.
That gained the company the CableMaster billing product and
ICOMS, a cable-telephony billing platform. It also gained the new entrant some of the
billing business of Cox Communications Inc. and Comcast Corp., both of which had been
investors in ISD.
Matrixx Marketing is a provider of outsourced
customer-care-management solutions for the communications, technology, financial-services
and consumer-goods industries.
CBIS reported revenues of $548 million for 1997; Matrixx
claimed $450 million in revenues.
The telco said Cincinnati Bell chairman Charles Mechem Jr.
will probably be elected chairman of Convergys and James Orr, COO of the telco, will
become the new subsidiary's president. The current presidents of Matrixx and CBIS, David
Dougherty and Robert Marino, respectively, will report to Orr.
LaMacchia said he will retire after the company separates
into two businesses.
