Mar 2015 Financial News

Mega-merger close pushed back

Mar 05, 2015

Telecommunications Authority chairman, Selby Wilson, disclosed on Monday that the country’s telecom regulator expects to complete its recommendation to the Government on the Cable & Wireless Communications/Columbus International transaction by the end of March.

“The matter is receiving the active consideration of the authority and would be concluded by the end of the month,” said Wilson, who also serves as a consultant to the Caribbean Telecommunications Union.

In the normal course of events, if TATT completes its recommendation by the end of March, Cabinet will get to adjudicate on the matter in April.

On Monday, Cable & Wireless Communications announced that it had agreed with Columbus to extend the long-stop date for the receipt of required consents and approvals for the proposed acquisition of Columbus. The long-stop date has been extended from February 28 to March 15.

The completion of the transaction—which involves Cable & Wireless Communications offering US$3 billion for 100 per cent of Columbus International—is conditional on it receiving “certain regulatory approvals in Barbados, T&T and Jamaica, unless this approval is waived by the two parties.

Jamaica gave the transaction its blessing in the middle of January, which leaves regulatory approval still to come from Barbados and T&T.

On the issue of the extension of the time for regulatory approval, the November 6 transaction announcement states: “The share purchase agreement will terminate automatically if completion has not occurred by 28 February 2015 (or such later date as the parties may agree)....Prior to February 28, the vendors may in their absolute discretion elect that the share purchase agreement will not terminate automatically on February 28, and to extend the long-stop date to April 30.”

Apart from the regulatory approvals of the major Caribbean markets, the transaction is conditional on the CWC shareholders passing the necessary resolutions by no later than December 12, 2014. This was done at a general meeting of CWC shareholders in London on December 5.

The transaction also requires the completion of what is referred to as the US carveout. This involves the transfer of certain US-licensed entities in the Columbus Group to a newly incorporated special purpose vehicle (SPV) owned by Clearwater and Brendan Paddick (one of the founders of Columbus) immediately prior to the completion, “so that completion can occur prior to the approval of the Federal C ommunications Commission of the United States being obtained.”

According to the November 6 announcement statement, the completion of the US carve-out is conditional upon the expiry of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (and any extensions thereof) or any waiting period having been otherwise terminated on terms acceptable to the company.

The final condition of the transaction is that no material adverse changes would have occurred between the announcement and the completion.

The total consideration payable to the sellers (Columbus) at the completion under the terms of the share purchase agreement is approximately US$1.85 billion for the entire issued share capital of Columbus, plus the assumption of US$1.17 billion in the net debt of Columbus.

The payment to the sellers will be settled through the payment of approximately US$707.5 million in cash and the issue of what is referred to as the consideration shares, which will be issued to entities ultimately controlled by John Risley (director and co-founder of Columbus), an entity ultimately controlled by John Malone (significant shareholder) and to Brendan Paddick (president, chief executive officer and co-founder of Columbus).

It is expected that the main sellers will, immediately after completion, hold approximately 20 per cent, 13 per cent and 3 per cent of CWC's outstanding shares, which means that the main Columbus shareholders will own 36 per cent of CWC, if the transaction is completed.

Source:
Trinidad Guardian, BG5
Thursday March 5, 2015