Atlantic Tele-Network Obtains Financing for Alltel Markets Buy
Atlantic Tele-Network (Nasdaq:ATNI) reported January 27, 2010 that it has amended and restated its existing senior secured credit facility, providing for the addition of a new $150m term loan to be used to fund its previously announced acquisition of former Alltel Corporation assets from Verizon Wireless (The Deal Advisor, 07/09, p.1). The amended and restated credit facility also includes a $73.9m term loan, which is the amount of the term loan outstanding under ATNI’s previous credit facility and a $75m revolving loan, which was also available under its previous credit facility. CoBank, ACB acted as administrative agent and lead arranger in the transaction.
In a press release, the company said, “We are moving ahead to ensure that we provide our customers with a seamless transition once the Alltel acquisition is completed, which we expect will be within the first quarter of this year.”
The company expects to borrow the entire amount of the new $150m term loan in connection with the proposed acquisition of the former Alltel assets.
The term loans mature on September30, 2014 and the revolving loan matures on September 10, 2014. Amounts borrowed under the credit facility bear interest at a rate equal to, at the company’s option, either (a)plus an applicable margin ranging from 3.50% to 4.75% or (b)base rate equal to the higher of 1.50% plus LIBOR or the prime rate, plus an applicable margin ranging from 2.50% to 3.75%.
JSICA Observations: ATNI indicates that the subscriber base in the subject markets remains stable at 800,000 post- and prepaid customers, and that it expects first year revenue to be between $450m-$500m. Cash flow, however, is expected to be below industry averages, “reflecting front-loaded transition and operating expenses.” The company said that EBITDA margins are expected to progressively increase in the first year and to reach more normalized levels, ranging from 20% to 30%, by 2011.
At just $200m, the deal shocked many in the industry last year with its bargain-basement pricing. Based on the updated company guidance, which includes a cash flow estimate for the first time, we peg the deal multiples at 0.4x revenue, 2.6x cash flow and $250 per subscriber.