WOW! sells five service areas in two separate transactionsWednesday, June 30th, 2021
WOW! to Sell Five Service Areas in Two Separate Transactions Totaling $1.8 Billion
- Transactions collectively reflect an implied multiple of 11.0x Adjusted EBITDA for the service areas divested
- Service area sales enable WOW! to reduce debt and to further pursue Edge-outs and greenfield and commercial opportunities as part of its broadband-first strategy
ENGLEWOOD, Colo. — WOW! Internet, Cable & Phone (NYSE: WOW), one of the nation’s leading broadband providers, today announced that it has entered into two separate definitive agreements to sell its Cleveland and Columbus, Ohio, service areas and its Chicago, Evansville, Indiana, and Anne Arundel, Maryland, service areas for $1.125 billion and $661 million, respectively. Total transaction gross proceeds will be approximately $1.786 billion. Atlantic Broadband, a U.S. cable operator and subsidiary of Cogeco Communications Inc. (TSE: CCA) (“Cogeco”), has agreed to acquire the Cleveland and Columbus markets in one transaction while in a separate transaction, Astound Broadband (dba RCN, Grande Communications and Wave Broadband) has agreed to acquire WOW!’s Chicago, Evansville and Anne Arundel service areas.
“We are pleased to reach these two agreements as WOW! takes a significant step toward accelerating our broadband-first growth strategy at a pivotal time in our industry,” said WOW! CEO Teresa Elder. “The substantial proceeds from these transactions reflect the attractiveness of our assets and the clear opportunity to expand our position as a trusted provider of reliable, accessible and fast broadband solutions. The divestiture of these markets will enable us to reduce our debt as we continue to execute our broadband-first strategy, including pursuing our Edge-out and greenfield strategies and expanding our commercial services.”
Ms. Elder continued: “With Atlantic Broadband and Astound Broadband, WOW! has found good stewards for our operations across these service areas and both share our employee- and customer-centric culture and values. They also have the resources and steadfast commitment to providing customers with the same great quality of service our customers in Illinois, Indiana, Maryland and Ohio have come to expect from WOW!.”
Upon closing, WOW!’s leverage ratio will be 2.5x, representing a significant reduction from the Company’s leverage ratio of 5.0x as of March 31, 2021 driven by lower net debt.
As part of these transactions, WOW! has entered into Transition Services Agreements with both parties to support post-transaction continuity of service during a transition period.
The transactions are expected to close in the second half of the year and are subject to certain regulatory reviews and approvals and the satisfaction of other customary closing conditions.
WOW!’s Preliminary Profile Post-Transaction
Upon completion of the transactions, WOW! will continue to serve its customers in 14 service areas in Alabama, Florida, Georgia, Michigan, South Carolina, and Tennessee. On a pro forma basis as of March 31, 2021, the Company would have had approximately 532,000 total subscribers, and 506,000 high-speed data revenue generating units. WOW!’s total number of homes passed would have been 1.9 million with a subscriber penetration rate of 29%, up from 26% pre-sale. For the trailing 12-month period ended March 31, 2021, Adjusted EBITDA would have been $288 million1, with an Adjusted EBITDA margin of 39%. Total revenue would have been $731 million, up 1% from the same 12-month period a year-ago with respect to the remaining systems, with HSD revenue of $369 million, up 10% from the same period a year ago.