HERNDON, VA.: Cable TV overbuilder RCN is being bought out by private equity investors ABRY Partner in a deal valued at $1.2 billion. Boston-based ABRY agreed to a price of $15 per share, or around $536 million, and the assumption of RCN’s debt, which stood at $730 million at the end of last September. RCN shares jumped from about $12.20 to more than $15 upon news of the acquisition.
The deal is structured such that RCN can solicit counter-offers through April 14. RCN reported a net loss of $6 million on revenues of $192 million for the third quarter.
ABRY manages about $2.75 billion and specializes in media and information technology companies. It owned Muzak before the elevator-music company filed for bankruptcy last year. RCN emerged from its own Chapter 11 bankruptcy in 2004. The company has mostly fiber-optic systems along the Eastern Seaboard in Boston, Philadelphia, Washington, D.C. and Allentown, Penn.
ABRY is providing equity investment; debt financing is being provided by SunTrust Robinson Humphrey, GE Capital, Société Générale and certain of its affiliates, SNL Kagan said. Deutsche Bank Securities and Waller Capital Partners LLC acted as financial advisors to RCN; SunTrust Robinson Humphrey was ABRY financial advisor. The firm will also be left lead joint book runner and administrative agent for the debt financing, Kagan said. GE Capital Markets and SG Americas Securities are acting as joint book runners for the debt financing.
The deal is expected to be completed the second half of this year pending stockholder and regulatory approval.
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