Alaska Communications to go private in $300M deal

Alaska Communications Systems Group Inc. reported solid third quarter results Nov. 5 on the heels of announcing a $300 million deal to go private under new investment house ownership.

The Anchorage-based telecom netted $2.3 million during the quarter on, coincidentally, 2.3 percent year-over-year total revenue growth. Total revenue for the quarter was $60.5 million and it is up 2.8 percent for the year at $178.2 million, according to the earnings report.

“Despite the pandemic we continue to grow our business while keeping our people and customers safe,” Alaska Communications CEO Bill Bishop said during the Nov. 5 earnings call.

Bishop said the cash deal purchase by an affiliate of the global investment firms Macquarie Capital and GCM Grosvenor, valued at approximately $300 million, is a continuation of the company’s efforts to maximize shareholder value. Macquarie and GCM have the desire to invest in Alaska Communications’ networks and better serve its customers, he said.

The deal announced Nov. 3 received unanimous support from the Alaska Communications board of directors, according to Bishop, and represents a nearly 51 percent premium on the 30-day weighted average price of Alaska Communications stock as of Nov. 2.

Under the deal the Macquarie and GCM affiliate will acquire all outstanding shares of Alaska Communications common stock at $3 per share.

There were approximately 54.1 million outstanding shares of Alaska Communications stock in the third quarter, according to the earnings report, which jumped from a Nov. 2 closing price of $1.91 per share to close at $3.04 per share following the sale announcement.

The company reported total assets of $567 million and total liabilities of $401.4 million through the third quarter. It held $141.5 million of net debt at the end of the quarter, down from $153.8 million to start the year.

Board chair David Karp said in a prepared statement that the Alaska Communications board is confident the deal is in the best interest of the company and its shareholders.

“Macquarie Capital has a proven track record of delivering large and complex transactions globally on accelerated timelines, and GCM’s Labor Impact Fund pro ides strategy-driven capital that we expect will generate real value for our customers and the Alaska Communications workforce,” Karp said.

The company currently employs more than 600 workers, mostly in Alaska.

Alaska Communications will hold a special stockholder meeting to vet and vote on the agreement as soon as practicable, according to a company statement. Per the agreement, the telecom can also solicit better deals from outside parties through Dec. 3.

Bishop said the company leaders expect to close the deal in the second half of 2021 presuming the requisite shareholder and regulatory hurdles are cleared.

A spokesman for GCM Grosvenor wrote in response to questions that the firm can’t comment on the transaction beyond what was disclosed Nov. 3.

The pending Alaska Communications sale would mark the second major Alaska telecom to be sold to Outside investors in recent years. Anchorage-based General Communication Inc. was sold to Colorado-based Liberty Interactive Corp. in 2017 for just more than $1.2 billion.

Alaska Communications sold its wireless phone business to GCI in early 2015 in a $300 million cash deal that transferred roughly 109,000 customers between the competitors.

Alaska Communications business now focuses on internet service and business phone systems.

Operationally, Alaska Communications completed subsea fiber upgrades to increase the capacity of its Northstar fiber system by five-fold and add redundancy to its two subsea fiber connections between Alaska and the Lower 48, Bishop said.

“We continue to actively deploy fiber for our 5G wireless backhaul build-out and have completed the work on our prefunded fiber projects in Alaska,” he said, adding the company hopes to expand its “fiber to home” offerings, particularly to multi-family units.

Chief Financial Officer Laurie Butcher said year-to-date capital spending was up just more than $1 million at $32.9 million to end the third quarter but COVID-19 restrictions will likely result in a 2020 total capital spend of between $37 million and $39 million, down slightly from prior expectations.

Butcher attributed the company’s revenue growth primarily to its broadband business, which accounted for more than 90 percent of the increased revenue.

Elwood Brehmer can be reached at [email protected].

11/10/2020 - 12:11pm