Bahrain’s Batelco has agreed to buy the majority of Cable & Wireless Communications’ (CWC) Monaco & Islands division for an enterprise value of US$680m.
Batelco will acquire CWC’s entire interest in the Maldives, Channel Islands and Isle of Man,…
Bahrain’s Batelco has agreed to buy the majority of Cable & Wireless Communications’ (CWC) Monaco & Islands division for an enterprise value of US$680m.
Batelco will acquire CWC’s entire interest in the Maldives, Channel Islands and Isle of Man, the Seychelles, South Atlantic territories and Diego Garcia.
CWC is also selling a 25% shareholding in Compagnie Monagesque de Communications (CMC), which holds its 55% interest in Monaco Telecom.
Batelco said the initial sum represents a multiple of 5.6x proportionate EBITDA for the twelve months ending 30 September 2012.
Under a put and call arrangement the remaining 75% of CMC can be transferred to Batelco for a further US$345m at a later stage, which would increase the total deal value to US$1.025bn, equalling 6.2x EBITDA. This would give Batelco control of Monaco Telecom and CWC’s minority stake in Afghan operator Roshan. If this option is not exercised, the 25% shareholding in CMC will be sold back to CWC for US$100m.
“We will continue to operate the Monaco Telecom business, with the option to crystallise the second stage of the transaction if necessary consents are obtained,” CWC CEO Tony Rice said in a press release.
In a conference call with analysts today Rice explained the two stage process for the Monaco Telecom sale was set up to allow execution of the main part of the transaction while discussions about a number of details with regards to operating contracts and arrangements of the Monegasque business are continuing.
JP Morgan and Akira Partners acted as financial advisers to CWC.
Batelco’s lead financial advisor is Houlihan Lokey. Citigroup also served as a financial advisor.
Linklaters and Ernst & Young acted as legal and accounting/tax advisers respectively, whilst Oliver Wyman was engaged to complete commercial and technical due diligence.
The acquisition is subject to Batelco and CWC shareholder approval. CWC expects to hold a shareholder meeting in January and to complete the transaction in March.
In the conference call CWC CFO Tim Pennington said the companies had been working on the transaction for eight months.
Batelco to raise US$1bn debt
Batelco said in a separate statement that it plans to raise up to US$1bn of debt through a bond issue and a term loan facility to finance the transaction, with Citigroup and BNP Paribas as its banks to raise the funds.
Batelco chairman Shaikh Hamad bin Abdulla Al Khalifa commented: “This acquisition supports our strategy by adding four new cash generative businesses, which will from the outset serve to diversify and enhance our profitably and cash flows and complement our continued efforts to drive value and build further market leadership in our six existing businesses across the Middle East region.”
Macau deal talks continuing
In the conference call CWC also confirmed that talks with regards to a sale of its 51% stake in Macanese operator CTM to Citic Telecom are continuing.
Rice said he expects to know the outcome of the talks “fairly quickly”, within the next two to three months and before the Monaco & Islands transaction completes.
Could make buys in Pan-America
CWC noted that today’s transaction, which sees the company exit nine territories in five different time zones and with four different currencies, is in line with company strategy to focus on Central America and the Caribbean.
CWC could use the proceeds of the transaction for new deals in its core American markets, CWCs’ management said during the conference call. CWC could increase stakes in operations it is already invested in, but it could also buy into new assets.
