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Thursday
Oct082015

Atlantic Tele-Network Announces Acquisition of Innovative Group of Companies

On Thursday, October 1st, Atlantic Tele-Network, Inc. (NASDAQ: ATNI) announced that it had acquired Caribbean Assets Holdings, LLC, the holding company for Innovative Communications Corporation (ICC) that provides cable TV, Internet and landline services primarily in the U.S. Virgin Islands.  ATN acquired the assets from the National Rural Utilities Cooperative Finance Corporation (CFC). 

Transaction Facts

  • ATN will pay approximately $145.0 million for the transaction.
  • The deal will be financed primarily with $85.0 million payable in cash and the option to finance the remaining $60.0 million of the purchase through a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative (RTFC).
  • Deal is expected to close in mid-2016.

Deal History

  • In 2006, ICC was forced into involuntary bankruptcy after defaulting on RTFC loans; RTFC had loaned more than $500m to ICC between 1987 and 2001.
  • CFC purchased ICC’s assets through bankruptcy in 2010.
  • ICC majority shareholder Jeffrey Prosser appealed the sale to CFC to the Virgin Island Supreme Court, which upheld the sale to CFC in 2012.
  • Prosser co-founded of ATN in 1987 with Cornelius Prior Jr., current chairman of the board for ATN.
  • Prosser and Prior led ATN’s acquisition Virgin Island Telephone Company (Vitelco).
  • Management differences at ATN led to a split of the company’s assets with Prosser retaining Vitelco (dba Innovative).

Financial and Strategic Considerations

  • ATN is a provider of telecommunication services to rural, niche and other under-served markets and geographies in the United States, Bermuda and the Caribbean and owns and operates solar power systems in select locations across the United States. 
  • Enables ATN to offer quad play--wireless, broadband, cable and wireline telephone—in U.S. Virgin Islands. 
  • ICC’s company-wide operations revenue was approximately $100.0 million for its most recently completed fiscal year that ended May 31, 2015.

JSICA’s Take

  • The EV/TTM Rev in this transaction represents an implied multiple of 1.5x, a discount to recently observed ILEC deals in the U.S.    
  • Deal signals ATN’s desire to expand its operations in Caribbean after winding down is U.S. based wireless operations in recent years
  • ATN subsequently announced that it had agreed to acquire 51% of Bermuda based KeyTech Limited providing entry into the Cayman Islands market