Hawaiian Telcom Stockholders to Receive
$30.75 per Share Consideration in a Cash and Stock
Transaction
Hawaiian Telcom (NASDAQ:HCOM), Hawai‘i’s leading fiber-based
integrated communications provider, and Cincinnati Bell (NYSE:CBB),
a leading fiber and IT services and solutions business, today
announced that their boards of directors approved a definitive
agreement under which the companies will combine in a cash and
stock transaction valued at approximately $650 million, including
the assumption of net debt.
Under the agreement, Hawaiian Telcom stockholders will have the
option to elect either $30.75 in cash, 1.6305 shares of Cincinnati
Bell common stock, or a mix of $18.45 in cash and 0.6522 shares of
Cincinnati Bell common stock for each share of Hawaiian Telcom,
subject to proration such that the aggregate consideration to be
paid to Hawaiian Telcom stockholders will be 60 percent cash and 40
percent Cincinnati Bell common stock. This consideration represents
a 26 percent premium to Hawaiian Telcom’s closing price of $24.44
on July 7, 2017, 24 percent premium to the volume-weighted average
price of the last 20 calendar days of $24.86, and 31 percent
premium to the volume-weighted average price of the last 12 months
of $23.55. Upon the closing of the transaction, Hawaiian
Telcom stockholders will own approximately 15 percent and
Cincinnati Bell stockholders will own approximately 85 percent of
the combined company.
Hawaiian Telcom and Cincinnati Bell will continue to maintain
their separate local brand identities and operations, while
combining their buying power and resources to continue to focus on
delivering world class integrated communications and technology
solutions for their local communities.
“Cincinnati Bell’s track record of success and commitment to
investing in the build out of its regional fiber network in both
urban and non-urban areas over the past decade makes it a great
partner for us,” said Scott Barber, Hawaiian Telcom president and
chief executive officer. “We look forward to sharing our companies’
fiber expertise and enhanced service offering as we continue to
expand our Next-Generation Fiber Network throughout the state of
Hawai‘i. With our highly complementary values, distinctive brands
and vision focused on fiber as the future, and our shared
commitment to the communities in which we operate, I am confident
this partnership will provide great opportunities for growth and
value creation to both Hawaiian Telcom and Cincinnati Bell
stockholders, along with our customers and partners.”
“Cloud migration, the need for fiber infrastructure that
supports 5G-ready, high-density data transmission and IoT are the
key trends that will define telecommunications in the future,” said
Leigh Fox, president and chief executive officer of Cincinnati
Bell. “We are excited about the opportunity to partner with
Hawaiian Telcom as part of Cincinnati Bell’s refined strategy to
build two distinct businesses with the appropriate scale, structure
and leadership to deliver superior operating results, while
providing strategic optionality from a diversified but
complementary portfolio of assets. Today’s announcement positions
us to capitalize on these favorable market dynamics while enhancing
our leadership at the forefront of the telecommunications
landscape. Hawaiian Telcom brings Cincinnati Bell greater financial
and operational scale and an established market position in a new
geography to seize upon the growing demand for fiber.”
The merger will bring together two companies with complementary
values, goals, and business strategies with a shared focus on
investing in and monetizing its fiber networks. The companies have
been successful for generations, Hawaiian Telcom since 1883 and
Cincinnati Bell since 1873, because of their commitment to their
local communities and their desire to provide access to innovative
technologies that fuel social and economic development.
This merger will combine Hawaiian Telcom’s 1,300 employees with
Cincinnati Bell’s 3,000 to create a bigger and stronger enterprise
that will foster greater innovation and deliver more competitive
products and services to customers. Cincinnati Bell is committed to
Hawaiian Telcom’s workforce and ensuring that it can meet the needs
of its customers today and into the future. Also, due to distance
and separate operations, this merger is not expected to materially
impact jobs in Hawai‘i. In fact, Cincinnati Bell has committed to
investing in Hawaiian Telcom’s Next-Generation Fiber network
statewide, which will create additional opportunities for
growth.
Hawaiian Telcom will continue to be locally managed from Hawai‘i
and its existing union labor agreements will be honored. Hawaiian
Telcom will name two directors to the combined company board of
directors and these seats will be held by Hawai‘i residents,
ensuring that Hawai‘i is well represented when broader strategic
decisions are made.
The partnership between Hawaiian Telcom and Cincinnati Bell is
an important step towards building scale and locking in fiber
density value for stockholders and customers, as Cincinnati Bell
continues to anticipate and capitalize on the growing demand for
fiber capacity. With the merger, Cincinnati Bell gains access to
both Honolulu, a well-developed, fiber-rich city, as well as to the
growing neighbor islands, and will provide Hawaiian Telcom with
expanded liquidity and capital flexibility to continue to expand
its Next-Generation Fiber network to enable growth and better serve
its customer base statewide. The companies’ combined fiber networks
exceed 14,000 fiber route miles. In addition, Hawaiian Telcom
provides Cincinnati Bell with direct access to the 2.6TB of
transpacific fiber cable capacity linking Asia and the U.S., which
expands Cincinnati Bell’s route diversity and gives the combined
company exposure to large, data-hungry demographics on both sides
of the Pacific.
“Hawaiian Telcom’s transformation from a legacy telephone
company to Hawai‘i’s Technology Leader would not have been possible
without our employees’ hard work and dedication as well as the
ongoing support of our stockholders,” added Barber. “Hawaiian
Telcom is in a position to benefit from this merger because of
their diligence and commitment. This deal represents the beginning
of a positive new chapter in Hawaiian Telcom and Cincinnati Bell’s
rich legacies in its communities and our mutual desire to ensure
our companies continue to stand the test of time. This combination
of like-minded, locally-focused companies has the potential to not
only ensure our long-term sustainability, but to catapult our
growth. Together, Hawaiian Telcom and Cincinnati Bell will continue
to expand the reach of our state-of-the-art fiber network
statewide, launch innovative IP-based products and services and as
a result, strengthen our competitive position and transform our
growth profile.”
This transaction is subject to certain customary closing
conditions including federal and state regulatory approvals and
approval by Hawaiian Telcom’s stockholders. The merger is expected
to close in the second half of 2018.
UBS Investment Bank is acting as financial advisor to Hawaiian
Telcom, and Gibson, Dunn & Crutcher LLP is serving as legal
counsel. Moelis & Company and Morgan Stanley & Co. LLC are
acting as financial advisors to Cincinnati Bell, and Cravath,
Swaine & Moore and Morgan, Lewis & Bockius, and BosseLaw,
PLLC are serving as legal counsel.
Conference Call
Cincinnati Bell will host a conference call on July 10, 2017, at
8:30 a.m. (ET) to discuss the transactions. A live webcast of the
call will be available via the Investor Relations section of
www.cincinnatibell.com. The conference call dial-in number is
800-930-1344, with the passcode 3371598. Callers located outside of
the U.S. and Canada may dial 719-457-2662. A taped replay of the
conference call will be available shortly after the conclusion of
the call. The replay will be available at 888-203-1112. For callers
outside of the U.S. and Canada, access information for the replay
can be found here. The replay reference number is 3371598. An
archived version of the webcast will also be available in the
Investor Relations section of www.cincinnatibell.com.
About Hawaiian TelcomHawaiian
Telcom (NASDAQ:HCOM), headquartered in Honolulu, is Hawai‘i's
technology leader, providing integrated communications, broadband,
data center and entertainment solutions for business and
residential customers. With roots in Hawai‘i beginning in 1883, the
Company offers a full range of services including Internet, video,
voice, wireless, data network solutions and security, colocation,
and managed and cloud services supported by the reach and
reliability of its next generation fiber network and a 24/7
state-of-the-art network operations center. With employees
statewide sharing a commitment to innovation and a passion for
delivering superior service, Hawaiian Telcom provides an Always
OnSM customer experience. For more information, visit
hawaiiantel.com.
About Cincinnati Bell Inc.With headquarters in
Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:CBB) provides
integrated communications solutions – including local and long
distance voice, data, high-speed Internet and video – that keep
residential and business customers in Greater Cincinnati and Dayton
connected with each other and with the world. In addition,
enterprise customers across the United States rely on CBTS, a
wholly-owned subsidiary, for efficient, scalable office
communications systems and end-to-end IT solutions. For more
information, please visit www.cincinnatibell.com.
Additional Information and Where to Find ItIn
connection with the proposed merger, Hawaiian Telcom intends to
file a preliminary proxy statement and file or furnish other
relevant materials with the Securities and Exchange Commission (the
“SEC”). Once the SEC completes its review of the preliminary
proxy statement, a definitive proxy statement and a form of proxy
will be filed with the SEC and mailed to the stockholders of
Hawaiian Telcom. Cincinnati Bell also intends to file with
the SEC a registration statement on Form S-4 in connection with the
merger, which will include the definitive proxy statement and a
prospectus with respect to Cincinnati Bell’s common shares to be
issued in connection with the merger. BEFORE MAKING ANY
VOTING DECISION, HAWAIIAN TELCOM’S STOCKHOLDERS ARE URGED TO READ
THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND
ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE
PROPOSED MERGER (INCLUDING, BUT NOT LIMITED TO, THE REGISTRATION
STATEMENT ON FORM S-4 FILED BY CINCINNATI BELL) OR INCORPORATED BY
REFERENCE IN THE PROXY STATEMENT (IF ANY) BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND THE PARTIES TO
THE PROPOSED MERGER. Investors and stockholders may obtain a
free copy of documents filed by Hawaiian Telcom and/or Cincinnati
Bell with the SEC at the SEC’s website at http://www.sec.gov.
In addition, investors and stockholders may obtain a free copy of
Hawaiian Telcom’s filings with the SEC from Hawaiian Telcom’s
website at http://ir.hawaiiantel.com or by directing a request to:
Hawaiian Telcom Holdco, Inc., 1177 Bishop Street, Honolulu, HI
96813, Attention: Secretary, (808) 546-4511. Investors and
stockholders may obtain a free copy of Cincinnati Bell’s filings
with the SEC from Cincinnati Bell’s website at
http://investor.cincinnatibell.com or by directing a request to:
Cincinnati Bell Inc., 221 East Fourth Street, Cincinnati, OH 45202,
Attention: Corporate Secretary, (513) 397-9900.
Participants in the SolicitationHawaiian
Telcom, Cincinnati Bell and their respective directors and certain
of their respective executive officers and employees may be deemed
to be participants in the solicitation of proxies from stockholders
of Hawaiian Telcom in favor of the proposed merger.
Information about Hawaiian Telcom’s directors and executive
officers and their ownership of Hawaiian Telcom’s common stock is
set forth in Hawaiian Telcom’s annual report on Form 10-K for the
fiscal year ended December 31, 2016, as filed with the SEC on March
14, 2017, and its definitive proxy statement for its 2017 annual
meeting of stockholders, as filed with the SEC on Schedule 14A on
March 14, 2017. Information about Cincinnati Bell’s directors
and executive officers is set forth in its definitive proxy
statement for its 2017 annual meeting of shareholders, which was
filed with the SEC on March 24, 2017. These documents are available
free of charge from the sources indicated above. Certain directors,
executive officers and employees of Hawaiian Telcom and Cincinnati
Bell may have direct or indirect interests in the proposed merger
due to securities holdings, vesting of equity awards and rights to
severance payments. Additional information regarding the direct and
indirect interests of these individuals and other persons who may
be deemed to be participants in the solicitation will be included
in the proxy statement, the registration statement and other
relevant materials with respect to the merger that Hawaiian Telcom
and Cincinnati Bell intend to file with the SEC and furnish to the
Company’s stockholders.
No Offer or SolicitationThe information in this
communication is for informational purposes only and is neither an
offer to purchase, nor a solicitation of an offer to sell,
subscribe for or buy any securities or the solicitation of any vote
or approval in any jurisdiction pursuant to or in connection with
the proposed transactions or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended and otherwise
in accordance with applicable law.
Forward-Looking StatementsThis release includes
certain statements and predictions that constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 (the “Reform Act”). In particular, any
statement, projection or estimate that includes or references the
words “believes”, “anticipates”, “intends”, “expected”, “will” or
any similar expression falls within the safe harbor of
forward-looking statements contained in the Reform Act.
Actual results or outcomes may differ materially from those
indicated or suggested by any such forward-looking statement for a
variety of reasons, including, but not limited to: failures in
Hawaiian Telcom’s critical back office systems and IT
infrastructure; breach of the our data security systems; increases
in the amount of capital expenditures required to execute our
business plan; the loss of certain outsourcing agreements, or the
failure of any third party to perform under these agreements; our
ability to sell capacity on the new submarine fiber cable project;
adverse changes to applicable laws and regulations; the failure to
adequately adapt to technological changes in the telecommunications
industry, including changes in consumer technology preferences;
adverse economic conditions in Hawai‘i; the availability of lump
sum distributions under our union pension plan; limitations on the
ability to utilize net operating losses due to an ownership change
under Internal Revenue Code Section 382; the inability to
service our indebtedness; limitations imposed on our business from
restrictive covenants in the credit agreements; severe weather
conditions and natural disasters; the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement with Cincinnati Bell or
conditions to the closing of the merger may not be satisfied or
waived; the failure to obtain the approval of the Company’s
stockholders or the failure to satisfy the closing conditions;
risks related to disruption of management’s attention from the
Company’s ongoing business operations due to the proposed merger;
the effect of the announcement of the merger on the ability of the
Company to retain and hire key personnel, maintain relationships
with its customers and suppliers, and operating results and
business generally; the transaction may involve unexpected costs,
liabilities or delays; the Company’s business may suffer as a
result of the uncertainty surrounding the transaction; the outcome
of any legal proceeding relating to the transaction; the Company
may be adversely affected by other economic, business and/or
competitive factors; and other risks to consummation of the
transaction, including the risk that the transaction will not be
consummated within the expected time period or at all. More
information on potential risks and uncertainties is available in
recent filings with the Securities and Exchange Commission,
including Hawaiian Telcom’s 2016 Annual Report on Form 10-K. The
information contained in this release is as of July 10, 2017. It is
anticipated that subsequent events and developments may cause
estimates to change, and the Company undertakes no duty to update
forward-looking statements.
Media Contact:
Su Shin
(808) 546-2344
su.shin@hawaiiantel.com
Investor Contact:
Ngoc Nguyen
(808) 546-3475
ngoc.nguyen@hawaiiantel.com
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