Private equity firm Pamlico Capital has moved back into the cable sector by acquiring two systems in South Dakota from regional operator WOW for US$262m.
Pamlico previously backed NewWave Communications before the cableco’s assets were sold off to…
Private equity firm Pamlico Capital has moved back into the cable sector by acquiring two systems in South Dakota from regional operator WOW for US$262m.
Pamlico previously backed NewWave Communications before the cableco’s assets were sold off to Time Warner Cable in 2011 and investment firm GTCR in 2013.
Pamlico has created a new cableco called Clarity Telecom to operate the assets. Clarity will be led by NewWave’s former management team headed by Jim Gleason.
Gleason described the South Dakota assets as “the platform to build upon for future acquisitions and growth”. He added that the company would focus on communities in South Dakota, southwest Minnesota and northwest Iowa for its future growth.
The acquisition is the third investment from Pamlico Capital III, a recently-raised fund with US$650m of aggregate commitments. It expects to close the transaction with WOW in late Q3 or early Q4, following the satisfaction of regulatory requirements and other customary closing conditions.
Pamlico has not disclosed a break down of how it will fund the purchase, but said that GE Capital and SunTrust Robinson Humphrey have committed to provide debt financing to support the transaction.
When the Pamlico Capital III fund was launched the firm said it will “seek equity investments of US$25m to US$75m in companies with total enterprise values of between US$50m and US$250m”, although the firm’s upper limit of equity investment is US$100m.
WOW said the price tag for the systems – Rapid City and Sioux Falls, South Dakota – equated to 8.2x adjusted EBITDA for 2013. The assets generated US$81m in revenue last year and have more than 50,000 residential and commercial customers.
WOW’s CEO Steven Cochran said that the sale enhances the cableco’s operating efficiencies and enables it to “continue focusing more aggressively on our long-term strategic initiatives”.
K&L Gates acted as legal counsel to Pamlico and Clarity’s legal counsel. RBC Capital Markets acted as financial advisor to WOW on the transaction, which is privately-owned and controlled by Avista Capital Partners.
WOW is the US’ tenth-largest pure play cableco according to the NCTA, and offers high-speed internet, cable TV, and telephony services.
It operates in Illinois, Michigan, Indiana, Ohio, Kansas, South Dakota, Tennessee, Alabama, Georgia, Florida and South Carolina.
