Alaska Communications (NASDAQ: ALSK), has entered into a transaction to sell its remaining wireless assets to GCI Communications, Inc. (NASDAQ: GNCMA) for $300 million and plans to use net proceeds to deleverage its balance sheet. A stronger balance sheet, combined with top and bottom line growth, better positions the company to evaluate a variety of additional opportunities to create shareholder value.
“Selling our wireless business increases attention to our greatest areas of growth and highest levels of profitability,” said Alaska Communications President and CEO Anand Vadapalli. “Upon closing, we will significantly strengthen our balance sheet by reducing debt by $250 million. Following closing, we expect to improve Adjusted EBITDA by creating synergies of approximately $12 million. Together with eliminating the overhang from wireless, this will reveal the underlying inherent value of our broadband and managed IT solutions business, opening gateways for new opportunities to create shareholder value.”
Transaction Detail:
In a separate release issued earlier today, Alaska Communications announced it agreed to sell its 33 percent interest in The Alaska Wireless Network, LLC and its wireless subscriber base to GCI for $300 million in cash. The parties expect the transaction to close in the first quarter of 2015. Alaska Communications will continue to receive preferred dividend payments from the AWN joint venture until close. Alaska Communications will incur costs associated with the transaction that include wind down costs of its retail stores, fees and expenses, purchase price adjustments and taxes. The proceeds net of these items are expected to be approximately $250 million. Alaska Communications will dedicate these proceeds to reduce debt to approximately $165 million from approximately $415 million, which will improve the net debt leverage ratio to 3.1x on a pro forma basis from 4.5x. This moves Alaska Communications from one of the highest to one of the lowest levered companies in its sector. Additionally, the company will improve Adjusted EBITDA by eliminating approximately $4 million of negative wireless retail margins and creating approximately $8 million of additional synergies in cost savings associated from simplifying the business.
The Company will host a conference call and live webcast on Dec., 5 at 3:00 p.m. Eastern Time to discuss the transaction. The live webcast will include a slide presentation. Parties in the United States and Canada can access the call at 1-877-397-0291 and enter passcode 771611. All other parties can access the call at 1-719-325-4757.
The live webcast of the conference call will be accessible from the “Events Calendar” section of the Company’s website (www.alsk.com). The webcast will be archived for a period of 90 days. A telephonic replay of the conference call will also be available two hours after the call and will run until Jan. 6, 2015 at 6:00 p.m. Eastern Time. To hear the replay, parties in the United States and Canada can call 1-888-203-1112 and enter pass code 9717877. All other parties can call 1-719-457-0820 and enter pass code 9717877.
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