Searchlight Capital acquires a big piece of Integra Telecom

Expects deal to close in Q4 2012
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Integra Telecom on Wednesday announced that Searchlight Capital Partners has purchased a large equity stake in the CLEC.

Under the terms of the agreement, Searchlight will acquire all of the equity interests that were held by Goldman, Sachs & Co., Integra's largest shareholder.

Led by senior partners formerly with investment management firms and that have investment experience in the telecom sector, Integra is Searchlight's third announced investment.

After meeting customary closing conditions, Searchlight expects the deal to close in Q4 2012. Houlihan Lokey served as financial advisor to Goldman, Sachs & Co. and Searchlight is being advised by Jefferies and Kirkland & Ellis LLP in connection with the transaction.

Other than thanking Kevin O'Hara and his management team for their work to reinvigorate the company, Searchlight would not provide any further comment about its purchase.

The transfer of the equity stake in Integra to Searchlight comes at a time when the CLEC continues to transition itself from selling services mainly to small to medium businesses (SMBs) to one that can serve larger business customers and wholesale carrier customers via its Electric Lightwave (ELI) division, which was just renamed Integra Wholesale.

Getting to this point only came after a roller coaster ride of various management team changes that occurred over the past year.

Following the departure of one of Integra Telecom's founders and CEO Dudley Slater, former Integra chairman Tom Casey who took over the CLEC to execute its larger business drive, only to abruptly leave to join pigment company Tronox Inc. But in December, 2011, Integra continued on with its larger business service market drive by naming one of Level 3 Communications' founders, Kevin O'Hara, as its CEO.

Since becoming CEO of Integra, O'Hara has been continually looking for ways to leverage its existing set of IP network and fiber assets to pursue opportunities in vertical market segments such as health care, education and state government agencies.     

To better serve the more rigorous larger business industry segments, the service provider has been making a number of new product and network expansions.

On the network side, Integra has been not only expanding its fiber footprint into more buildings for fiber-based Ethernet, but also equipping more ILEC central offices (COs) in its serving area with Ethernet over Copper (EoC). Besides Ethernet, it has also begun offering a set of optical wavelength and even dark fiber services.

"Integra had an amazing set of assets, and it was those assets that caused a strategic discussion about as you go forward do you want to continue to compete where your primary battleground is on the lower end of the market, not just SMB but even the lower end of enterprise where you probably most vulnerable to the cable companies," he told FierceTelecom during the recent COMPTEL Plus event in Dallas. "We began a process a couple of years ago to try and get the company moving in a direction that was more facility-based and move up market with a combination of enterprise and wholesale."  

In addition to driving product development, O'Hara has been revamping its management team, appointing telecom veterans Martha Tate as VP of its wholesale division and Ken Smith as the executive VP of sales.

For more:
- see the release

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Related articles:
Integra Telecom appoints Kevin O'Hara as new CEO
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Integra Telecom appoints telecom veteran Ken Smith EVP of sales
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