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Entries in Innovative Communication Corporation (5)


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

Innovative Telephone Looks to Bring Next Generation Services to the VI

Source: Metaswitch Press Release

Innovative Telephone has selected Metaswitch Networks as its strategic partner in bringing next generation voice services to the islands of St. Croix, St. John and St. Thomas.

Innovative Telephone has been providing telephone services to the U.S. Virgin Islands since 1959.  Today the company serves both the business and residential markets with a full range of services including local telephone, long-distance, internet, cable TV, wireless, and business phone systems. 


NECA Asks FCC to Deny Innovative's Request to Correct HCLS Loop Count

Source: FCC Reply Comments

NECA submitted reply comments in response to the FCC's Public Notice regarding Virgin Island Telephone d/b/a  Innovative Telephone request to waive NECA's 24-month rolling adjustment period, require NECA to recalculate Innovative's 2011 High Cost Loop Support based on corrected loop count data, and distribute additional support resulting from the calculation to Innovative. Innovative estimates that it would be able to collect an additional $540,000 in high cost loop support. Innovative also points out that it stands to lose an additional $540,000 going forward due to the FCC decision to freeze HCLS for 2012 based on 2011 levels.

NECA points out that the HCLS fund is subject to an indexed cap, adjusted annually. For Innovative to receive the funds, all other rural ILECs must cumulatively refund a proportionate amount so that the fund does not exceed its cap. NECA warns that other ILECs facing similar cost recovery issues would seek similar treatment if Innovative's petition is granted.

NECA said it 'understands Innovative's unfortunate circumstance' to discover an error in its loop count and have limited recourse to correct it. However, NECA warns the FCC that granting the request has both high cost support and access revenue requirement implication that should be considered carefully. 


CFC's Innovative Plans to Spend $78 Million to Upgrade Network

Source: Virgin Island Daily News

According to an article in the Virgin Island Daily News, Innovative Telephone submitted a modernization plan to the Virgin Island Public Service Commission outlining its modernization plan to overhaul Internet, phone and cable.

Innovative CEO Seth Davis said the four-year modernization plan will invest approximately $78 million in the territory's telecommunications infrastructure, the article said.

The company was taken over by creditor National Rural Utilities Cooperative Finance Corporation in October 2010.

In April 2009, National Rural Utilities Cooperative Finance Corporation made a credit bid to buy Innovative's telephone, cable TV, Internet and cellular phone holdings. The cooperative loaned Innovative more than $500 million between 1987 and 2001. Innovative defaulted on the loans and was forced into involuntary bankruptcy in 2007.


CFC Appoints New Management Team for Innovative Takeover

Source: Company Press Release 

After finally winning approval to take control of the operating subsidiaries of Innovative Communication Corporation, including the Virgin Island Telephone Corporation, the National Rural Utilities Cooperative Finance Corporation (CFC) announced Innovative’s new executive management team.  Seth R. Davis will serve as the ceo. CFC also appointed J. Robert Gary as cfo; Terry Falls as svp of network operations; Michael D. Soileau as svp of sales, marketing and customer experience; and Anna Marie Lanham-Brown as svp of information technology. This executive team has been secured under an agreement with FTI Consulting, Inc. (FTI), a global business management firm that advised CFC during the credit bid process.