STAMFORD, Conn., Feb. 7, 2013 /PRNewswire/ -- Charter
Communications, Inc. (NASDAQ: CHTR) ("Charter") and Cablevision
Systems Corporation (NYSE: CVC) announced today that they have
entered into a definitive agreement under which Charter
Communications Operating, LLC will acquire Cablevision's Bresnan
Broadband Holdings, LLC ("Optimum West") for $1.625 billion in cash. Optimum West
manages cable operating systems in Colorado, Montana, Wyoming and Utah that pass more than 660,000 homes and
serve 304,000 video subscribers and 366,000 customer
relationships.
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"With this transaction, Charter will acquire some of the fastest
growing cable assets in the United
States," said Tom Rutledge,
Charter's President and CEO. "These former Bresnan properties
operate in growing communities, and the network, employees and
customer base have been well served for many years. In particular,
over the past two years Cablevision, as Optimum West, has grown
video, Internet and telephone customers through the execution of a
product and service strategy, which is the same as the one we
recently implemented at Charter. Optimum West is an ideal fit
for Charter and we anticipate an efficient integration
process."
Cablevision President and CEO James L.
Dolan said, "We are proud of the value we created in the
Optimum West properties. We made strategic investments in the cable
system and significantly enhanced the network to provide our
customers with more robust products and services. I am
confident that our Optimum West team will continue to build on that
success under new stewardship."
The $1.625 billion acquisition
price represents a purchase price multiple of 8.9x Optimum West's
third quarter 2012 annualized Adjusted EBITDA1 and a
purchase price multiple of less than 8.0x Charter's estimate of
Optimum West's first year Adjusted EBITDA under Charter. The
transaction will be structured to deliver to Charter a full step-up
in the tax basis of the acquired assets. Taking into account
Charter's estimate of the present value of this tax asset, the
effective purchase price multiple is less than 7.0x the estimated
first year Adjusted EBITDA. "Given the double digit growth
profile of Optimum West, we view the implied purchase price
multiple as attractive. In addition, the acquisition will
increase our conversion rate of Adjusted EBITDA to free cash
flow.1 At closing, we expect to be at 5.0x
leverage and continue to target 4.0x to 4.5x over time," noted
Christopher Winfrey, Charter's
CFO.
Charter will fund the acquisition of Optimum West with
$1.5 billion of committed bank
financing to Charter Communications Operating, LLC, and liquidity
from cash on hand and its revolving credit facility.
The transaction is subject to customary closing conditions,
including regulatory approval. We expect closing to occur in
the third quarter of 2013.
Credit Suisse and Goldman Sachs acted as financial advisors to
Charter, and have also provided debt financing commitments for the
transaction.
Citi and J.P. Morgan acted as co-lead financial advisors to
Cablevision. BofA Merrill Lynch and Guggenheim Securities
also provided financial advice to Cablevision. Sullivan &
Cromwell LLP acted as legal counsel to Cablevision.
Use of Non-GAAP Financial Metrics
Adjusted EBITDA and free cash flow are not Generally Accepted
Accounting Principles ("GAAP") financial measures and should be
considered in addition to, not as a substitute for, net loss or
cash flows from operating activities reported in accordance with
GAAP. These terms, as defined by Charter, may not be comparable to
similarly titled measures used by other companies.
Adjusted EBITDA is defined as net loss plus net interest
expense, income taxes, depreciation and amortization, stock
compensation expense, loss on extinguishment of debt, and other
operating (income) expenses, such as special charges and (gain)
loss on sale or retirement of assets. As such, it eliminates the
significant non-cash depreciation and amortization expense that
results from the capital-intensive nature of the business as well
as other non-cash or special items, and is unaffected by capital
structure or investment activities. These measures are limited in
that they do not reflect the periodic costs of certain capitalized
tangible and intangible assets used in generating revenues and the
cash cost of financing.
Free cash flow is defined as net cash flows from operating
activities, less purchases of property, plant and equipment and
changes in accrued expenses related to capital expenditures.
Adjusted EBITDA and free cash flow provide information useful to
investors in assessing performance and ability to service its debt,
fund operations and make additional investments with internally
generated funds.
About Charter
Charter (NASDAQ: CHTR) is a leading broadband communications
company and the fourth-largest cable operator in the United States. Charter provides a full
range of advanced broadband services, including advanced Charter
TV® video entertainment programming, Charter Internet® access, and
Charter Phone®. Charter Business® similarly provides scalable,
tailored, and cost-effective broadband communications solutions to
business organizations, such as business-to-business Internet
access, data networking, business telephone, video and music
entertainment services, and wireless backhaul. Charter's
advertising sales and production services are sold under the
Charter Media® brand. More information about Charter can be found
at charter.com.
About Cablevision Systems Corporation
Cablevision Systems Corporation is one of the nation's leading
media and telecommunications companies. In addition to delivering
its Optimum-branded cable, Internet, and voice offerings throughout
the New York area, the company
owns and operates cable systems serving homes in four Western
states. Cablevision's local media properties include News 12
Networks, MSG Varsity and Newsday Media Group. Cablevision
also owns and operates Clearview Cinemas. Additional
information about Cablevision is available on the Web at
www.cablevision.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), regarding, among
other things, our plans, strategies and prospects, both business
and financial. Although we believe that our plans, intentions and
expectations reflected in or suggested by these forward-looking
statements are reasonable, we cannot assure you that we will
achieve or realize these plans, intentions or expectations.
Forward-looking statements are inherently subject to risks,
uncertainties and assumptions including, without limitation, the
factors described under "Risk Factors" from time to time in our
filings with the Securities and Exchange Commission ("SEC"). Many
of the forward-looking statements contained in this release may be
identified by the use of forward-looking words such as "believe,"
"expect," "anticipate," "view," "should," "planned," "will," "may,"
"intend," "estimated," "aim," "on track," "target," "opportunity,"
"tentative," "positioning," "designed," "create" and "potential,"
among others. Important factors that could cause actual results to
differ materially from the forward-looking statements we make in
this release are set forth in other reports or documents that we
file from time to time with the SEC, and include, but are not
limited to:
- our ability to sustain and grow revenues and free cash flow by
offering video, Internet, telephone, advertising and other services
to residential and commercial customers, to adequately meet the
customer experience demands in our markets and to maintain and grow
our customer base, particularly in the face of increasingly
aggressive competition, the need for innovation and the related
capital expenditures and the difficult economic conditions in
the United States;
- the development and deployment of new products and
technologies;
- the impact of competition from other market participants,
including but not limited to incumbent telephone companies, direct
broadcast satellite operators, wireless broadband and telephone
providers, digital subscriber line ("DSL") providers, and video
provided over the Internet;
- general business conditions, economic uncertainty or downturn,
high unemployment levels and the level of activity in the housing
sector;
- our ability to obtain programming at reasonable prices or to
raise prices to offset, in whole or in part, the effects of higher
programming costs (including retransmission consents);
- the effects of governmental regulation on our business;
- the availability and access, in general, of funds to meet our
debt obligations prior to or when they become due and to fund our
operations and necessary capital expenditures, either through (i)
cash on hand, (ii) free cash flow, or (iii) access to the capital
or credit markets; and
- our ability to comply with all covenants in our indentures and
credit facilities any violation of which, if not cured in a timely
manner, could trigger a default of our other obligations under
cross-default provisions.
All forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by
this cautionary statement. We are under no duty or obligation to
update any of the forward-looking statements after the date of this
release.
1 Adjusted EBITDA and free cash flow are
Non-GAAP measures used by Charter and are defined in the "Use of
Non-GAAP Financial Metrics" section.
SOURCE Charter Communications, Inc.; Cablevision Systems
Corporation