Shenandoah Telecommunications Company (“Shentel” or the “Company”)
(Nasdaq: SHEN) announced that it has entered into a Purchase and
Sale Agreement with Vertical Bridge Holdco, LLC (“Vertical Bridge”)
to sell its tower portfolio and operations (“Tower Portfolio”) to
Vertical Bridge for $310.3 million in cash (the “Transaction”). The
Transaction is subject to customary closing conditions. Vertical
Bridge will pay Shentel the $310.3 million purchase price on the
date of the initial closing. Subsequent closings will occur as
closing conditions are met for any remaining sites. The Company
expects an initial closing in March 2024. The Company expects to
pay up to $10 million in 2024 income taxes as a result of the gain
on the sale after utilization of net operating loss carryforwards.
The Shentel Tower Portfolio being sold consists of 226 tower
portfolio sites1 and generated $18.6 million in revenue, $9.5
million of operating income and $11.6 million of Adjusted EBITDA2
in 2023. Please refer to the Company’s Form 8-K filed with the
Securities and Exchange Commission (“SEC”) for additional details
on the Transaction.
“The proceeds from the sale of our Tower business will provide
Shentel with additional growth capital to support the planned
expansion of our Glo Fiber line of business to approximately
600,000 homes and business passings by the end of 2026. With the
expected closing of this Transaction and the previously announced
$356 million of committed financings supporting our pending
acquisition of Horizon Telcom, we believe our capital structure is
well balanced and will provide future financial flexibility,” said
Shentel’s President and CEO, Christopher E. French.
“We are pleased to add these purpose-built broadband telephony
towers to our growing portfolio. The towers are high quality assets
with available capacity for additional tenants and are located in
difficult areas to build new towers due to zoning restrictions and
terrain challenges. The geographic concentration of the portfolio
offers a unique opportunity for future deployment of existing and
new technologies,” said Vertical Bridge’s President and CEO, Ron
Bizick.
About Shenandoah TelecommunicationsShenandoah
Telecommunications Company (Shentel) provides broadband services
through its high speed, state-of-the-art fiber optic and cable
networks to customers in the Mid-Atlantic United States. The
Company’s services include: broadband internet, video and voice;
fiber optic Ethernet, wavelength and leasing; and tower colocation
leasing. The Company owns an extensive regional network with
approximately 9,900 route miles of fiber and 219 macro cellular
towers. For more information, please visit www.shentel.com.
About Vertical BridgeVertical Bridge REIT, LLC
is the largest private owner and operator of communications
infrastructure and locations in the United States, with a portfolio
of more than 500,000 sites, including over 11,000 owned and
master-leased towers and the nation's largest and tallest
collection of broadcast tower sites. The Company's portfolio
spreads across all 50 states and Puerto Rico and is comprised of
towers, rooftops, billboards, utility attachments, convenience
stores and other locations in support of wireless network
deployments. In addition to colocation, Vertical Bridge offers
build-to-suit, edge data centers and in-building wireless network
solutions.
Based in Boca Raton, Florida, Vertical Bridge was founded in
2014 and is led by a senior management team with over 400 years of
collective experience in tower infrastructure and related sectors.
Vertical Bridge became the first tower company in the world to
reach net-zero emissions, maintaining CarbonNeutral® certification
since 2020. For more information, please visit
www.verticalbridge.com.
Advisors
- Rothschild & Co acted as sole
financial advisor to Shentel and Lape Mansfield Nakasian + Gibson,
LLC is acting as its legal counsel.
- Truist Securities, Inc. served as
exclusive financial advisor to Vertical Bridge and Greenberg
Traurig, LLP is acting as its legal counsel.
This release contains forward-looking statements
about Shentel regarding, among other things, its business strategy,
its prospects and its financial position. These statements can be
identified by the use of forward-looking terminology such as
“believes,” “estimates,” “expects,” “intends,” “may,” “will,”
“plans,” “should,” “could,” or “anticipates” or the negative or
other variation of these or similar words, or by discussions of
strategy or risks and uncertainties. The forward-looking statements
are based upon management’s beliefs, assumptions and current
expectations and may include comments as to Shentel’s beliefs and
expectations as to future events and trends affecting its business
that are necessarily subject to uncertainties, many of which are
outside Shentel’s control. Although management believes that the
expectations reflected in the forward-looking statements are
reasonable, forward-looking statements are not, and should not be
relied upon as, a guarantee of future performance or results, nor
will they necessarily prove to be accurate indications of the times
at which such performance or results will be achieved, and actual
results may differ materially from those contained in or implied by
the forward-looking statements as a result of various factors. A
discussion of other factors that may cause actual results to differ
from management’s projections, forecasts, estimates and
expectations is available in Shentel’s filings with the Securities
and Exchange Commission, including our Annual Report on Form 10-K
for the year ended December 31, 2023 and our Quarterly Reports
on Form 10-Q. Those factors may include, among others, Shentel’s
ability to satisfy the closing conditions for the initial closing
(or the additional closing conditions for any subsequent closings)
of the Transaction, the initial closing (and any subsequent
closings) of the Transaction may not occur on time or at all, the
ability to obtain the required regulatory approvals and satisfy the
closing conditions required for Shentel’s pending acquisition of
Horizon Telecom (the “Horizon Transaction”), the closing of the
Horizon Transaction may not occur on time or at all, the expected
savings and synergies from the Horizon Transaction may not be
realized or may take longer or cost more than expected to realize,
changes in overall economic conditions including rising inflation,
regulatory requirements, changes in technologies, changes in
competition, demand for our products and services, availability of
labor resources and capital, natural disasters, pandemics and
outbreaks of contagious diseases and other adverse public health
developments, such as COVID-19, and other conditions. The
forward-looking statements included are made only as of the date of
the statement. Shentel undertakes no obligation to revise or update
such statements to reflect current events or circumstances after
the date hereof, or to reflect the occurrence of unanticipated
events, except as required by law.
CONTACT: Shenandoah Telecommunications CompanyJim Volk Senior
Vice President and Chief Financial
Officer540-984-5168Jim.Volk@emp.shentel.com
Non-GAAP Financial MeasuresAdjusted
EBITDA
The Company defines Adjusted EBITDA as net income (loss) from
continuing operations calculated in accordance with GAAP, adjusted
for the impact of depreciation and amortization, impairment, other
income (expense), net, interest income, interest expense, income
tax expense (benefit), stock compensation expense, transaction
costs related to acquisition and disposition events (including
professional advisory fees, integration costs and related
compensatory matters), restructuring expense, tax on equity award
vesting and exercise events and other non-comparable items. A
reconciliation of net income (loss), which is the most directly
comparable GAAP financial measure, to Adjusted EBITDA is provided
below herein.
The Company uses Adjusted EBITDA as a supplemental measure of
performance to evaluate operating effectiveness and assess its
ability to increase revenues while controlling expense growth and
the scalability of the Company’s business growth strategy. Adjusted
EBITDA is also a significant performance measure used by the
Company in its incentive compensation programs. The Company
believes that the exclusion of the expense and income items
eliminated in calculating Adjusted EBITDA provides management and
investors a useful measure for period-to-period comparisons of the
Company’s core operating results by excluding items that are not
comparable across reporting periods or that do not otherwise relate
to the Company’s ongoing operations. Accordingly, the Company
believes that Adjusted EBITDA provides useful information to
investors and others in understanding and evaluating the Company’s
operating results. However, use of Adjusted EBITDA as an analytical
tool has limitations, and investors and others should not consider
it in isolation or as substitutes for analysis of our financial
results as reported under GAAP. In addition, other companies may
calculate Adjusted EBITDA or similarly titled measures differently,
which may reduce its usefulness as a comparative measure.
Year Ended December
31, 2023 |
|
|
|
|
(in
thousands) |
|
|
Tower |
|
Net income (loss) |
|
|
$ |
9,495 |
|
|
Depreciation and amortization |
|
|
|
2,103 |
|
|
Impairment expense |
|
|
|
— |
|
|
Other income, net |
|
|
|
— |
|
|
Income tax expense (benefit) |
|
|
|
— |
|
|
Stock-based compensation |
|
|
|
— |
|
|
Restructuring charges and transaction related fees |
|
|
|
— |
|
|
Adjusted EBITDA |
|
|
$ |
11,598 |
|
|
1 The 226 tower sites being sold include 218 macro cellular
towers and 8 small cell sites. The Transaction excludes 1 macro
cellular tower that Shentel will retain.2 Non-GAAP measure. See the
disclosure captioned “Non-GAAP Financial Measures” below in this
press release for more details and a reconciliation to the most
comparable GAAP measure.
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