Cable & Wireless Communications Plc sells the majority of the Monaco & Islands businesses to Batelco Group
Cable & Wireless Communications Plc ("CWC" or "the Company") today announces that it has agreed with Batelco Group ("Batelco") the sale of the majority of the businesses within its Monaco & Islands division for an enterprise value of US$680 million (the "Disposal").
CWC will divest its entire shareholdings in its businesses in the Maldives, Channel Islands and Isle of Man, the Seychelles, South Atlantic and Diego Garcia as well as a 25% shareholding in Compagnie Monegasque de Communication SAM ("CMC"), the company which holds CWC's 55% interest in Monaco Telecom.
The Disposal accelerates the delivery of CWC's strategy to reshape its business, reduce its geographic spread, and focus on the Central American and Caribbean region, as well as increasing the Company's financial flexibility.
The consideration (on a cash and debt-free basis and assuming a normal level of working capital) of US$680 million will be paid in cash by Batelco upon completion of the transaction ("Completion"), and represents a multiple of 6.3 times the proportionate EBITDA (for the 12 months to 31 March 2012) of the businesses being sold.
Subject to the satisfaction of necessary regulatory and other conditions, including approval from CWC shareholders, Batelco will take control of each of the majority-owned business units upon Completion, which is expected to take place by the end of CWC's current financial year. CWC will continue to operate the Monaco Telecom business in partnership with the Principality of Monaco as co-shareholder.
The cash proceeds arising from the Disposal will be used to reduce the Company's net borrowings and increase its financial flexibility. As a result of the Disposal (including the 25% shareholding in CMC), the Group's net debt position will be reduced from US$1,588 million as at 30 September 2012 to approximately US$937 million on a pro forma basis, implying proportionate net debt / EBITDA of 1.8x (for the 12 months to 30 September 2012).
CWC and Batelco have also entered into certain put and call option arrangements over CWC's remaining 75% interest in CMC. The options will enable CWC to sell, and Batelco to purchase, the controlling stake in Monaco Telecom for an additional consideration of US$345 million. These options can be exercised within 12 months of completion of the Disposal, subject to obtaining necessary regulatory and other consents, including the approval of the Principality of Monaco. If the necessary consents are obtained and either option is exercised, the completion of the second stage of the transaction would increase the total consideration to US$1,025 million, representing a multiple of 6.7 times the proportionate EBITDA (for the 12 months to 31 March 2012) for the sale of the entire Monaco & Islands business unit.
If the necessary consents are not obtained, CWC and Batelco have agreed a further option arrangement which enables the return of the 25% shareholding in CMC (originally transferred to Batelco) back to CWC for a consideration of US$100 million.
The Disposal will also position CWC to be able to make value-enhancing investments in the pan-America region. Any investments will be based on strict financial criteria and considered alongside regular reviews of balance sheet efficiency and shareholder returns policy.
Tony Rice, CEO of Cable & Wireless Communications, commented:
"The disposal of the Monaco & Islands portfolio is consistent with our objective of building a growth-driven,
Pan-America focused business. The Monaco & Islands portfolio is a premium telecoms business and we are pleased to have agreed a deal that achieves an attractive value for our shareholders. We believe that Batelco will be an excellent owner and operator, bringing deep telecoms capability and international experience, and will continue the development of the businesses. The disposal will substantially reduce the geographic spread of our Group as well as increasing our financial flexibility. We will continue to operate the Monaco Telecom business, with the option to crystallise the second stage of the transaction if necessary consents are obtained."
Sheikh Mohamed bin Isa Al Khalifa, Batelco Group Chief Executive, commented:
"We are pleased to announce this acquisition which will increase the scale and diversification of our operations. Batelco Group will have the opportunity to operate, in collaboration with its new business partners, communications businesses across 17 markets. This acquisition supports our strategy by adding new cash generative business clusters to our existing operations across the Middle Eastern region. We look forward to working closely with all the shareholders and management teams in the companies to ensure we continue to deliver value and innovation to customers and be recognized as market leaders."
The consideration is subject to normal post-completion cash, debt and working capital adjustments. In addition, owing to the size of the transaction relative to the size of the Company, the transaction constitutes a Class 1 transaction under the UK Listing Rules and is therefore conditional upon the approval of CWC shareholders.
A circular will be sent in due course to CWC shareholders containing further details of the transaction, together with a notice convening a General Meeting of the Company to consider and, if thought fit, approve the transaction.
A conference call for analysts and investors to discuss the Disposal will be held at 11 am GMT on 3
December 2012. A presentation will be simultaneously webcast at www.cwc.com
UK: +44 (0) 20 3364 5381
US: +1 646 254 3361
Confirmation Code: 6450378
Participants will have to quote the above code when dialling into the conference.
Audio playback of the call will be available shortly after the call finishes until 10
2012. The details for the playback are:
+44 (0) 20 3427 0598
US: +1 347 366 9565
Replay Access Code:
For further information contact:
Cable & Wireless Communications Plc
Kunal Patel +44 (0) 20 7315 4083
Mike Gittins +44 (0) 20 7315 4184
Lachlan Johnston +44 (0) 20 7315 4006 / +44 (0) 7800 021 405
Steve Smith +44 (0) 20 7315 4070 / +44 (0) 7785 778 375
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J.P. Morgan Cazenove (Financial Adviser, Sponsor & Joint Corporate Broker)
Dwayne Lysaght +44 (0) 20 7742 4000
Akira Partners LLP (Financial Adviser)
Andre Sokol +44 (0) 20 7565 0808
Maitland (Financial PR)
Neil Bennett +44 (0) 20 7379 5151
Notes to Editors:
About Cable & Wireless Communications Plc
Cable & Wireless Communications Plc is a global full-service communications business. We operate leading communications businesses through four regional units - the Caribbean, Panama, Macau and Monaco & Islands. Our services include mobile, broadband and domestic and international fixed line services in most of our markets as well as pay TV, data centre and hosting, carrier and managed service/social telecom (telecom enabled public services) solutions. Our operations are focused on providing our customers - consumers, businesses, governments - with world-class service. Serving the communities where we operate is at the heart of our approach, and we are committed to behaving in an ethical and socially responsible manner. For more information visit www.cwc.com
Batelco Group, listed on the Bahrain Bourse, is the leading integrated communications provider in the Kingdom of Bahrain and a company of reference among the region's key telecommunications players for innovation and customer experience. Batelco serves both the corporate and consumer markets in the most liberalised and competitive environment in the Middle East region. It delivers cutting-edge fixed and wireless telecommunications services to its customers in Bahrain, Kuwait, Saudi Arabia, Jordan, Yemen and Egypt. The Batelco Group of companies offers end-to-end telecommunications solutions for its residential, business and government customers in Bahrain on Next Generation, all IP fixed and 3.75G wireless networks, MPLS based regional data solutions and GSM mobile and WiMax broadband services across the countries in which it operates.