Alaska Communications Sells Remaining Wireless Assets for $300 Million
December 04 2014 - 4:05PM
Business Wire
-Significant deleveraging event, achieving
one of the lowest leverage levels in the industry-
-Targeting Adjusted EBITDA improvements of
approximately $12 million-
-Revealing the inherent value of Broadband
and Managed IT Solutions business-
Alaska Communications (NASDAQ: ALSK) has entered into a
transaction to sell its remaining wireless assets to GCI
Communications, Inc. (NASDAQ: GNCMA) for $300 million and plans to
use net proceeds to deleverage its balance sheet. A stronger
balance sheet, combined with top and bottom line growth, better
positions the company to evaluate a variety of additional
opportunities to create shareholder value.
“Selling our wireless business increases attention to our
greatest areas of growth and highest levels of profitability,” said
Alaska Communications President and CEO Anand Vadapalli. “Upon
closing, we will significantly strengthen our balance sheet by
reducing debt by $250 million. Following closing, we expect to
improve Adjusted EBITDA by creating synergies of approximately $12
million. Together with eliminating the overhang from wireless, this
will reveal the underlying inherent value of our broadband and
managed IT solutions business, opening gateways for new
opportunities to create shareholder value.”
Moving Forward with Focus
“We are demonstrating great success in our business broadband
strategy, evidenced by the trust placed in us by our longtime
customers, like Anchorage School District, and new customers, like
the State of Alaska. Our broadband investments are already yielding
industry leading revenue growth. As we focus our attention and
resources on reliable broadband and managed IT solutions, we look
to be the partner of choice for Alaska businesses fortifying our
customer relationships by delivering improved service.”
“We appreciate the loyal support of our wireless customers and
thank our wireless team who consistently deliver excellent customer
service. We are committed to providing customers with this same
level of quality service and support during the transition of
wireless services,” concluded Vadapalli.
Wireless customers will not see any immediate changes and do not
need to take any action at this time and Alaska Communications will
notify customers with further details regarding this transition.
Alaska Communications will continue to serve businesses,
governments and other carriers with its full range of managed IT
solutions delivered over highly reliable carrier-class Ethernet
networks.
Transaction Detail
In a separate release issued earlier today, Alaska
Communications announced it agreed to sell its 33 percent interest
in The Alaska Wireless Network, LLC and its wireless subscriber
base to GCI for $300 million in cash. The parties expect the
transaction to close in the first quarter of 2015. Alaska
Communications will continue to receive preferred dividend payments
from the AWN joint venture until close. Alaska Communications will
incur costs associated with the transaction that include wind down
costs of its retail stores, fees and expenses, purchase price
adjustments and taxes. The proceeds net of these items are expected
to be approximately $250 million. Alaska Communications will
dedicate these proceeds to reduce debt to approximately $165
million from approximately $415 million, which will improve the net
debt leverage ratio to 3.1x on a pro forma basis from 4.5x. This
moves Alaska Communications from one of the highest to one of the
lowest levered companies in its sector. Additionally, the company
will improve Adjusted EBITDA by eliminating approximately $4
million of negative wireless retail margins and creating
approximately $8 million of additional synergies in cost savings
associated from simplifying the business.
Evercore Partners and Stephens Inc. provided fairness opinions
to the Board of Alaska Communications related to the transaction.
Sidley Austin LLP served as legal advisors to Alaska
Communications. As part of the transaction, the company is seeking
consent from its existing secured lenders. JPMORGAN CHASE BANK,
N.A. is the administrative agent for the senior secured credit
facilities.
Alaska Communications Conference Call
The Company will host a conference call and live webcast on Dec.
5 at 3:00 p.m. Eastern Time to discuss the transaction. The live
webcast will include a slide presentation. Parties in the United
States and Canada can access the call at 1-877-397-0291 and enter
passcode 771611. All other parties can access the call at
1-719-325-4757.
The live webcast of the conference call will be accessible from
the "Events Calendar" section of the Company's website
(www.alsk.com). The webcast will be archived for a period of 90
days. A telephonic replay of the conference call will also be
available two hours after the call and will run until Jan. 6, 2015
at 6:00 p.m. Eastern Time. To hear the replay, parties in the
United States and Canada can call 1-888-203-1112 and enter pass
code 9717877. All other parties can call 1-719-457-0820 and enter
pass code 9717877.
About Alaska Communications
Alaska Communications (NASDAQ: ALSK) is a leading provider of
advanced broadband and managed service solutions for businesses and
consumers in Alaska. The Company operates a highly reliable,
advanced statewide data and voice network with the latest
technology and the most diverse undersea fiber optic system
connecting Alaska to the contiguous United States. For more
information, visit www.alaskacommunications.com or
www.alsk.com.
Non-GAAP Financial Measures
This release includes information related to management's
estimate of adjusted EBITDA. Adjusted EBITDA, in this context, may
not be consistent with EBITDA measures used by other companies, are
not measurements under generally accepted accounting principles
(GAAP) and should not be considered a substitute for other measures
of financial performance recorded in accordance with GAAP.
Management of Alaska Communications believes that EBITDA provides
useful information to investors. Due to the complexities of
estimating cash from operations in future periods, the company is
not able to provide a reconciliation of adjusted EBITDA to its
nearest GAAP measure.
Forward-Looking Statements
This release includes certain "forward-looking statements," as
that term is defined in the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on
management's beliefs as well as on a number of assumptions
concerning future events made using information currently available
to management. Readers are cautioned not to put undue reliance on
such forward-looking statements, which are not a guarantee of
performance and are subject to a number of uncertainties and other
factors, many of which are outside Alaska Communications control.
For further information regarding risks and uncertainties
associated with the company's business, please refer to Alaska
Communications' SEC filings.
Alaska CommunicationsMedia Relations:Heather
Cavanaugh, 907-564-7722Director, Corporate
CommunicationsorInvestor Relations:Tiffany Dunn,
907-564-7556Manager, Board and Investor
RelationsACSInvestors@acsalaska.com
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