Liberty Latin America to Acquire Controlling Interest in Cabletica
February 12 2018 - 5:00PM
Business Wire
- Acquisition of 80% stake in leading
Costa Rican cable operator
- Continued investment & innovation
to benefit Cabletica’s customers
- Leveraging Liberty Latin America’s
regional scale to drive synergies
Liberty Latin America Ltd. (“Liberty Latin America”) (NASDAQ:
LILA and LILAK, OTC Link: LILAB), a leading telecommunications
company with operations in Chile, Puerto Rico, the Caribbean and
other parts of Latin America, today announced that it has entered
into a definitive agreement to acquire 80% of Costa Rican cable
operator, Cabletica, which is part of Televisora de Costa Rica S.A.
(“Televisora”), in an all cash transaction. In the transaction,
Cabletica is being valued at an enterprise value of CRC 143 billion
(approximately $250 million1,2), which equates to a multiple of
6.3x Cabletica’s fiscal year (September 30) 2017 Adjusted EBITDA3
after including projected annual run-rate cost synergies4. At
closing, Cabletica is expected to have total net debt of
approximately $125 million. The current owners of Cabletica will
retain the remaining 20% interest.
Balan Nair, President and CEO of Liberty Latin America,
commented, “The acquisition of a leading cable operator in Costa
Rica is an exciting move as it adds further scale to our growing
platform and diversifies us into one of the region’s most
attractive markets. We look forward to building on Cabletica’s
achievements and partnering with its current owners, further
investing in enhancing products and services for Cabletica’s
customers, while also integrating the business with Liberty Latin
America. This transaction is a prime example of our consolidation
ambitions, leveraging our unique subsea and terrestrial footprint,
in a region that remains highly fragmented and continues to be both
underpenetrated and underserved by high-speed data services.”
Cabletica provides analog and digital television, broadband
internet and fixed-line telephony services to residential
customers. As of September 30, 2017, the hybrid fiber-coaxial
network of Cabletica passed approximately 562,000 homes5 covering
nearly 40% of the homes in Costa Rica. Cabletica served a total of
207,000 customers5 at the end of September, who subscribed to
327,000 subscription services5.
René Picado, President of Televisora, said, “We are delighted to
enter into this agreement and look forward to a long and successful
partnership with Liberty Latin America that will deliver many
benefits for both our customers and employees. We also look forward
to further developing the strong content alliance between Cabletica
and Televisora and have extended the carriage of exclusive local
sports channels TD+ and TD+2 as part of the transaction.”
Liberty Latin America intends to finance the acquisition of the
80% equity stake in Cabletica through a combination of incremental
debt borrowings and existing liquidity. The transaction excludes
Televisora’s existing content assets, which will be retained by
Televisora, some of which will continue to be provided to Cabletica
on an exclusive basis. The transaction is subject to customary
closing conditions, including regulatory approvals, and is expected
to close during the second half of 2018.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding the timing and benefits of the
transaction, including scale and synergy benefits and
opportunities; the expected impact of the transaction on the
operations and financial performance of Liberty Latin America and
other information and statements that are not historical fact.
These forward-looking statements involve certain risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by these statements. These risks
and uncertainties include events that are outside of our control,
such as hurricanes and other natural disasters, our ability to
obtain regulatory consents for the transaction as well as other
customary conditions to closing, our and Cabletica’s ability to
continue financial and operational growth at historic levels,
continued use by subscribers of our and Cabletica’s services, our
ability to achieve expected operational efficiencies, synergies and
economies of scale, as well as other factors detailed from time to
time in Liberty Latin America’s filings with the Securities and
Exchange Commission including Amendment No. 1 to our Registration
Statement on Form S-1 filed on December 8, 2017. These
forward-looking statements speak only as of the date of this
release. Liberty Latin America expressly disclaims any obligation
or undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
Liberty Latin America’s expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based.
About Televisora de Costa Rica S.A.
Televisora comprises Cabletica and certain other content assets
including Costa Rica’s largest Free-To-Air channel (Canal 7) and
the only local sports channel. Televisora was founded in 1958 by
the Picado Family and has been a market leader ever since. Today,
Televisora is number one in ratings and advertising share in Costa
Rica. Following the acquisition, Televisora will retain a 20% stake
in Cabletica and full ownership of its content assets, which are
not included in the transaction.
About Liberty Latin America
Liberty Latin America is a leading telecommunications company
operating in over 20 countries across Latin America and the
Caribbean under the consumer brands VTR, Flow, Liberty, Más Móvil
and BTC. The communications and entertainment services that we
offer to our residential and business customers in the region
include combinations of services comprised of digital video,
broadband internet, telephony and mobile services. Our business
products and services include enterprise-grade connectivity, data
center, hosting and managed solutions, as well as information
technology solutions with customers ranging from small and medium
enterprises to international companies and governmental agencies.
In addition, Liberty Latin America operates a sub-sea and
terrestrial fiber optic cable network that connects over 40 markets
in the region.
Liberty Latin America has three separate classes of common
shares, which are traded on the NASDAQ Global Select Market under
the symbols "LILA" (Class A) and "LILAK" (Class C), and on the OTC
link under the symbol "LILAB" (Class B).
For more information, please visit www.lla.com.
_________________________________________________________________
1 Based on a USD/CRC foreign exchange rate of 572 as of
February 9, 2018. 2 The purchase price for the 80% equity stake is
subject to customary adjustments under the transaction documents. 3
The Adjusted EBITDA (defined as earnings before net financing
expenses, income taxes, depreciation and amortization) for the
twelve months ending September 30, 2017 (fiscal year 2017),
represents Liberty Latin America’s management’s best estimate of
Cabletica’s Adjusted EBITDA based upon financial information
obtained from the management of Televisora. Such financial
information is in accordance with International Financial Reporting
Standards (“IFRS”), as adjusted to include the capitalization of
customer installation costs, which are expensed in accordance with
Televisora’s IFRS accounting policies and will be capitalized in
accordance with accounting principles generally accepted in the
United States (“U.S. GAAP”). Liberty Latin America has not
completed its analysis of the differences between Liberty Latin
America’s U.S. GAAP accounting policies and Televisora’s IFRS
accounting policies with respect to Cabletica’s financial
information. 4 The projected annual run-rate cost synergies by
2021. 5 Operating statistics for Cabletica are based on Cabletica’s
counting policies. Nearly all of Cabletica’s homes passed are
two-way capable. Operating statistics are subject to change after
the completion of the transaction once Cabletica’s statistics are
presented in accordance with Liberty Latin America’s policies.
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