Cable & Wireless Communications (CWC) on Monday signed an agreement with Batelco Group to sell the majority of its holdings in the Monaco & Islands division for $680 million.
A previous report revealed that Bahrain-based Batelco was willing to pay up to $1 billion for CWC's assets in Monaco, the Maldives, the Falkland Islands and other island nations.
Under the terms of the agreement, CWC will divest its shareholdings in businesses in the Maldives, Channel Islands and Isle of Man, the Seychelles, South Atlantic and Diego Garcia as well as a 25 percent shareholding in Compagnie Monegasque de Communication SAM (CMC), the company which holds CWC's 55 percent interest in Monaco Telecom.
The service provider said this "disposal" is part of its strategy to achieve four main goals: reshape its business, reduce its geographic reach, focus on the Central American and Caribbean region, and increase its financial flexibility.
Upon completion of the deal, Batelco will pay $680 million in cash for the assets, which CWC represents a "multiple of 6.3 times the proportionate EBITDA (for the 12 months to 31 March 2012) of the businesses being sold."
Once the purchase clears necessary regulatory and other conditions, including CWC shareholder approval, Batelco will gain control of each of the majority-owned business units, which the companies say will happen by the end of CWC's current financial year. CWC added that it will continue to operate the Monaco Telecom business via a partnership with the Principality of Monaco as co-shareholder.
From a financial perspective, CWC said it will use the proceeds to reduce its net borrowings and increase financial flexibility. It will be able to reduce its debt position from $1.58 million as of Sept. 30 2012 to about $937 million on a pro forma basis.
"The disposal of the Monaco & Islands portfolio is consistent with our objective of building a growth-driven, Pan-America focused business," said Tony Rice, CEO of Cable & Wireless Communications, in a release announcing the agreement with Batelco. "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."
In addition, CWC and Batelco have agreed to put and call arrangements over CWC's remaining 75 percent interest in CMC. This means that CWC could sell the controlling stake in Monaco Telecom for $345 million to Batelco. Like the initial agreement to sell the stakes in these holdings, they will also have to get necessary regulatory and other approvals, including the consent of the Principality of Monaco.
However, if neither service provider can get the necessary consents, the two providers have crafted another arrangement that enables the return of the 25 percent shareholding in CMC back to CWC for $100 million.
For more:
- see the release
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