Crown Castle International Corp. (NYSE:CCI) (“Crown Castle”)
announced today that it has signed a definitive agreement to sell
its Australian subsidiary (“CCAL”) to a consortium of investors led
by Macquarie Infrastructure and Real Assets for an aggregate
purchase price of approximately A $2.0 billion in cash
(“Transaction”), or approximately US$1.6 billion assuming an
exchange rate of 0.80 US dollars to 1.0 Australian dollar.
CCAL is 77.6% owned by Crown Castle. Upon consummation of the
Transaction, Crown Castle expects to receive net proceeds of
approximately US$1.3 billion after accounting for its ownership
interest, repayment of intercompany debt owed to it by CCAL and
estimated transaction fees and expenses. The Transaction is
expected to close during the second quarter of 2015. Crown
Castle expects to use the net proceeds from the Transaction to
finance its previously announced acquisition of Sunesys and for
general corporate purposes, including the repayment of certain of
its indebtedness.
"The sale of CCAL allows us to redeploy capital
towards our growing small cell networks, which we expect will be
accretive to our long-term AFFO and dividend per share growth
rates," stated Ben Moreland, Crown Castle’s President and Chief
Executive Officer. "We believe we are in the early stages of
small cells deployment and are excited by the opportunities that we
see ahead of us. While CCAL has been a great contributor to
our business, our decision to divest this business is opportunistic
and allows us to re-allocate capital to growth enhancing
initiatives in the US market, which we believe is the most
attractive wireless market in the world for wireless
investment. I would like to thank our friends and colleagues
at CCAL who, since CCAL’s establishment in 2000, have built CCAL
into the leading tower operator in Australia.”
CCAL was expected to contribute approximately
US$97 million to US$102 million to Crown Castle's previously
provided full year 2015 Outlook for Adjusted EBITDA of $2.145
billion to $2.160 billion. Further, CCAL was expected to
contribute approximately US$58 million to US$63 million to Crown
Castle’s previously provided full year 2015 Outlook for Adjusted
Funds from Operations of $1.450 billion to $1.465 billion,
respectively. Crown Castle's full year 2015 Outlook was
previously provided on April 22, 2015 and assumed an exchange rate
of 0.76 US dollars to 1.0 Australian dollar for the second, third
and fourth quarter of 2015.
ABOUT CCAL
Since its establishment in 2000, CCAL has grown
to become the largest independent tower operator in Australia with
a nationwide portfolio of approximately 1,800 sites providing
significant wireless communications coverage to substantially all
Australians throughout all States and Territories. Crown Castle
Australia's customers include major mobile telecommunications
carriers such as Optus, Telstra and Vodafone Hutchison Australia;
wireless broadband service providers such as NBN Co.; and key
emergency service network providers.
ABOUT CROWN CASTLE
Crown Castle provides wireless carriers with the
infrastructure they need to keep people connected and businesses
running. With approximately 40,000 towers and 14,000 small cell
nodes supported by approximately 7,000 miles of fiber, Crown Castle
is the nation's largest provider of shared wireless infrastructure
with a significant presence in the top 100 US markets. In
addition, Crown Castle operates approximately 1,800 towers in
Australia. For more information on Crown Castle, please visit
www.crowncastle.com.
Cautionary Language Regarding
Forward-Looking Statements
This press release contains forward-looking
statements that are based on Crown Castle management's
expectations. Such statements include plans, projections and
estimates regarding (1) the Transaction, (2) anticipated
Transaction proceeds, use of Transaction proceeds and benefits
which may be derived therefrom, (3) timing of the Transaction, (4)
US dollar to Australia dollar exchange rates, (5) demand for,
growth of and opportunities relating to small cells, (6) the US
wireless market, (7) CCAL’s contribution to Crown Castle’s
financial or operating results, (8) Adjusted EBITDA, and (9)
Adjusted Funds from Operations. Such forward-looking statements are
subject to certain risks, uncertainties and assumptions, including
prevailing market conditions and other factors. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those expected. More information about potential risk factors
that could affect Crown Castle and its results is included in Crown
Castle's filings with the Securities and Exchange Commission. The
term "including," and any variation thereof, means "including,
without limitation."
Non-GAAP Financial Measures and Other
Calculations
This press release includes presentations of
Adjusted EBITDA and Adjusted Funds from Operations (“AFFO”), which
are non-GAAP financial measures. These non-GAAP financial
measures are not intended as alternative measures of operating
results or cash flow from operations (as determined in accordance
with Generally Accepted Accounting Principles ("GAAP")). Each
of the amounts included in the calculation of Adjusted EBITDA and
AFFO are computed in accordance with GAAP, with the exception of:
(1) sustaining capital expenditures, which is not defined under
GAAP and (2) our adjustment to the income tax provision in
calculations of AFFO for periods prior to our REIT conversion.
Our measures of Adjusted EBITDA and AFFO may not
be comparable to similarly titled measures of other companies,
including other companies in the tower sector or those reported by
other REITs. Our AFFO may not be comparable to those reported
in accordance with National Association of Real Estate Investment
Trusts, including with respect to the impact of income taxes for
periods prior to our REIT conversion.
Adjusted EBITDA and AFFO are presented as
additional information because management believes these measures
are useful indicators of the financial performance of our core
businesses. In addition, Adjusted EBITDA is a measure of
current financial performance used in our debt covenant
calculations.
Adjusted EBITDA. Crown Castle defines Adjusted
EBITDA as net income (loss) plus restructuring charges (credits),
asset write-down charges, acquisition and integration costs,
depreciation, amortization and accretion, amortization of prepaid
lease purchase price adjustments, interest expense and amortization
of deferred financing costs, gains (losses) on retirement of
long-term obligations, net gain (loss) on interest rate swaps,
impairment of available-for-sale securities, interest income, other
income (expense), benefit (provision) for income taxes, cumulative
effect of change in accounting principle, income (loss) from
discontinued operations, and stock-based compensation expense.
Funds from Operations (“FFO”). Crown Castle
defines Funds from Operations as net income plus real estate
related depreciation, amortization and accretion and asset
write-down charges, less noncontrolling interest and cash paid for
preferred stock dividends, and is a measure of funds from
operations attributable to CCIC common stockholders.
Adjusted Funds from Operations (“AFFO”).
Crown Castle defines Adjusted Funds from Operations as FFO before
straight-line revenue, straight-line expense, stock-based
compensation expense, non-cash portion of tax provision, non-real
estate related depreciation, amortization and accretion,
amortization of non-cash interest expense, other (income) expense,
gain (loss) on retirement of long-term obligations, net gain (loss)
on interest rate swaps, acquisition and integration costs, and
adjustments for noncontrolling interests, and less capital
improvement capital expenditures and corporate capital
expenditures.
Sustaining capital expenditures. Crown
Castle defines sustaining capital expenditures as either (1)
corporate related capital improvements, such as buildings,
information technology equipment and office equipment or (2)
capital improvements to tower sites that enable our customers'
ongoing quiet enjoyment of the tower.
Tables reconciling these non-GAAP financial
measures are shown below. The components in these tables may not
sum to the total due to rounding.
CCAL Adjusted EBITDA for the year ending December 31,
2015 is forecasted as follows: |
|
|
(in millions) |
Full
Year 2015Outlook |
Net income (loss)
(a) |
$41 to
$67 |
Adjustments to increase
(decrease) net income (loss): |
|
Asset write-down
charges |
$0 to
$1 |
Depreciation,
amortization and accretion |
$19 to
$29 |
Interest Income |
$0 to
$1 |
Benefit (provision) for
income taxes |
$15 to
$20 |
Stock-based
compensation expense |
$1 to $5 |
Adjusted EBITDA
(b) |
$97 to $102 |
(a)
Exclusive of the intercompany interest expense |
(b) The
above reconciliation excludes line items included in our Adjusted
EBITDA definition which are not applicable for the periods
shown. |
CCAL FFO and AFFO for the year ending December 31,
2015 are forecasted as follows: |
|
|
(in millions) |
Full
Year 2015Outlook |
Net income
(a) |
$41 to
$67 |
Real estate related
depreciation, amortization and accretion |
$17 to
$23 |
Asset write-down
charges |
$0 to
$1 |
Adjustment for
noncontrolling interest (c) |
$(13) to $(6 ) |
FFO |
$61 to $66 |
|
|
FFO (from above) |
$61 to
$66 |
Adjustments to increase
(decrease) FFO: |
|
Straight-line
revenue |
$(30)
to $(20) |
Straight-line
expense |
$1 to
$5 |
Stock-based
compensation expense |
$1 to
$5 |
Non-cash portion of tax
provision |
$4 to
$14 |
Non-real estate related
depreciation, amortization and accretion |
$2 to
$6 |
Adjustment for
noncontrolling interest |
$13 to
$6 |
Capital improvement
capital expenditures |
$(2)
to $(1) |
Corporate capital
expenditures |
$(6) to $(4) |
AFFO (b) |
$58 to $63 |
(a) Exclusive of the
intercompany interest expense |
(b) The above
reconciliation excludes line items included in our AFFO definition
which are not applicable for the periods shown. |
(c) Inclusive of the
noncontrolling interest related to real estate related
depreciation, amortization and accretion and asset write
downs. |
Contacts: Jay Brown, CFO
Son Nguyen, VP - Corporate Finance
Crown Castle International Corp.
713-570-3050
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