Frontier has launched a $450 million offering of its shares, and an offering of $1.75 billion of its preferred stock, par value 1 cents per share with the intention of raising $2.5 billion in cash to fund part of its acquisition of Verizon's wireline properties.
The service provider said it also intends to grant a green shoe option of up to $75 million more worth of shares and up to $175 million more worth of mandatory convertible preferred stock.
Frontier will use the proceeds of these offerings to finance a part of the cash portion for its previously announced acquisition of Verizon's (NYSE: VZ) wireline properties in California, Florida and Texas and to pay related fees and expenses.
The acquisition of the Verizon assets is expected to close in the first half of 2016.
However, the closing of these offerings are not conditioned on each other or on the closing of the acquisition.
Similar to its earlier acquisition of AT&T's wireline operations in Connecticut and its related statewide fiber network and U-verse operations, the Verizon deal is also transformational.
A key piece of the Verizon acquisition is scale. Out of this deal, Frontier will enhance its network with a larger set of voice, broadband and video customers, including 3.7 million voice connections; about 2.2 million broadband customers, including about 1.6 million FiOS Internet customers; and approximately 1.2 million FiOS video customers.
FiOS expansion will be a key issue industry watchers will be looking at as it completes the integration of the Verizon wireline properties into its fold.
Dan McCarthy, president and CEO of Frontier, told investors during the recent JP Morgan Global Technology, Media and Telecom Conference that he sees potential to deepen the FiOS footprint in California, Florida and Texas--three markets where Verizon has wide penetration of its fiber-to-the-home (FTTH) service.
In particular, Frontier would consider wiring new new housing developments being built in each state with fiber facilities, but has not made any specific plans yet.
- see the release
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