Arkansas-based Windstream has announced a definitive agreement to acquire 100% of Q-Comm, a privately-owned provider of regional fibre services in the US, for about US$782m in cash, stock and debt.
The takeover will see Windstream pay approximately…
Arkansas-based Windstream has announced a definitive agreement to acquire 100% of Q-Comm, a privately-owned provider of regional fibre services in the US, for about US$782m in cash, stock and debt.
The takeover will see Windstream pay approximately US$278m in cash, repay Q-Comm’s debt worth US$267m, and issue around 20.6 million common shares worth US$237m at Tuesday’s closing price of US$11.49 per share.
Windstream said that although the company may choose to raise debt financing in the future, it expects to have sufficient liquidity in cash balances and revolving credit capacity to fully finance the cash aspect of the takeover.
As a result of the transaction, Windstream will also takeover Q-Comm’s subsidiaries, fibre service provider Kentucky Data Lind (KDL) and exchange-service company Norlight.
In a statement, Windstream president and CEO Jeff Gardner said: “This transaction builds on Windstream’s strategy to become a next-generation telecom provider focused on broadband and enterprise customers.
“KDL’s extensive fiber network creates savings for us as well as opportunities to grow business revenues, particularly transport services for wireless carriers.”
According to Windstream, KDL and Norlight achieved US$231m in revenue and US$92.8m in OIBDA for the 12 months ended June 30, 2010.
Stephens and BofA Merrill Lynch were Windstream’s financial advisers on the transaction, and Bryan Cave LLP acted as its legal adviser. Q-Comm hired RBC Daniels as financial adviser and used Sonnenschein Nath & Rosenthal LLP as legal adviser.
Windstream has been busy making acquisitions of smaller telcos to expand its fibre footprint. The company said it made four acquisitions last year with a total value of US$2.2bn. Just two months ago, it announced the completion of its US$1.2bn cash-and-share acquisition of local provider Iowa Telecom.
Windstream recently reported that its 2Q OIBDA, excluding non-cash pension expense, non-cash stock-based compensation and restructuring charges, was approximately US$480m, a decrease of less than 1% year-over-year.
A takeover of Q-Comm, which has been approved by both boards, is still subject to regulatory approval, but is expected to close in the fourth quarter of 2010.
