Cequel Communications to Initiate Refinancing Process

Tue Jan 31, 2012 10:12am EST

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ST. LOUIS (January 31, 2012) - Cequel Communications Holdings I, LLC ("Cequel," and together with its subsidiaries, the "Company") announced today that its subsidiary, Cequel Communications, LLC, intends to begin a process to refinance its existing $2.525 billion credit facility (the "Existing Credit Facility") with a new $2.7 billion credit facility (the "New Credit Facility").

The New Credit Facility is expected to consist of a $500 million revolver and a $2.2 billion term loan B. If the refinancing of the Existing Credit Facility is successful, the Company expects to use the proceeds from the New Credit Facility to repay in full and terminate the Existing Credit Facility and to make distributions to Cequel Communications Holdings, LLC ("Cequel Holdings"), Cequel's parent company, of $370 million in March 2012 and up to an additional $70 million in May 2012.  Cequel Holdings is expected to use such distributions to repay a portion of the capital contributions made by holders of common units of Cequel Holdings and to make certain payments to holders of options and restricted units of Cequel Holdings.  Cequel has no current plans for any further distributions.  In any event, Cequel will not make any such additional distributions prior to April 1, 2013. There is no guarantee that any such refinancing transactions will be consummated on terms acceptable to the Company or at all.

In connection with the refinancing, Cequel is disclosing to potential lenders under the New Credit Facility the following preliminary information with respect to its results for the year ended December 31, 2011 (the "Preliminary Financial Information").  The Preliminary Financial Information below represents Cequel's preliminary estimates and is based on information available to its management team as of the date of this release.  The Preliminary Financial Information is not a guarantee of future performance and is subject to the completion of audited financial statements for the year ended December 31, 2011, and accordingly is subject to change. Interested parties should review the Preliminary Financial Information together with Cequel's historical financial statements and the accompanying notes, which are available on the Company's website (suddenlink.com). Cequel does not intend to update the Preliminary Financial Information set forth below and disclaims any obligation to do so.

The Preliminary Financial Information as described below is presented both on an actual basis and on a pro forma basis to include the acquisition of all of the issued and outstanding capital stock of NPG Cable, Inc., Mercury Voice and Data Company, and NPG Digital Phone, Inc., which occurred on April 1, 2011, as well as other previously disclosed small acquisitions and divestitures, as if those transactions had been consummated on January 1, 2010.

On a pro forma basis for the year ended December 31, 2011, revenue is expected to be $1,929.9 million, a 7.1% increase over revenue for the prior year.  Adjusted EBITDA is expected to be between $715.0 and $718.0 million, an expected increase of 8.6% to 9.1% over Adjusted EBITDA for the prior year.  For the year ended December 31, 2011, Cequel added approximately 151,300 revenue generating units, an increase of approximately 4.6%.  Pro Forma Adjusted EBITDA, as defined in our credit facility and bond indenture, is expected to be between $723.0 million and $726.0 million for the year ended December 31, 2011.
  

Cequel Communications Holdings I, LLC
Preliminary Financial Information - Actual Results
Fourth Quarter and Full Year 2011
(all dollar amounts in millions, except per customer amounts)
(unaudited)
Actual Operating Results
Q4 2011Q4 2010Growth
Revenue$489.7 $446.2 9.7%
Adjusted EBITDA (range) (a)$188.0 - 191.0$162.0 16.0% - 17.9%
Average Revenue per Unit$129.31 $118.32 9.3%
FY 2011FY 2010Growth
Revenue$1,900.7 $1,689.1 12.5%
Adjusted EBITDA (range) (a) $705.0 - 708.0$617.3 14.2% - 14.7%
(a) Adjusted EBITDA is a non-GAAP financial measure defined as net income/(loss), plus interest expense, provision for income taxes, depreciation, amortization, non-cash share based compensation expense, (gain)/loss on sale of cable assets, loss on swap termination and loss on extinguishment of debt.

Actual Customer Metrics
Ending Units 12/31/11Ending Units 12/31/10Q4'11
Net Gain
FY'11
Net Gain
Revenue Generating Units:
Basic video customers    1,252,200     1,215,700        (16,100)        36,500
Digital video customers      767,300       651,400         13,700       115,900
Residential high-speed
     Internet customers
      951,400       826,300         14,200       125,100
Residential telephone customers      438,600       358,700         12,500         79,900
Total Revenue Generating Units    3,409,500     3,052,100         24,300       357,400

Customer Relationships:At 12/31/11At 12/31/10
Total Customer Relationships          1,373,900           1,273,000
Double Play Relationships             527,800              481,700
Double Play Penetration38.4%37.8%
Triple Play Relationships             321,900              266,700
Triple Play Penetration23.4%21.0%
Total Bundled Relationships             849,700              748,400
Bundled Penetration61.8%58.8%
Non-video customer relationships             218,300              169,900
Non-video as % of total customer relationships15.9%13.3%

Commercial Customers:Ending Units at 12/31/11Ending Units at 12/31/10Q4'11
Net Gain
FY'11
Net Gain
Commercial Internet            46,500             39,800             900          6,700
Commercial Telephone            18,100             11,100          1,500          7,000

Cequel Communications Holdings I, LLC
Preliminary Financial Information - Actual Results
Fourth Quarter and Full Year 2011
(all dollar amounts in millions, except per customer amounts)
(unaudited)
Selected Balance Sheet and Other Data - Actual
At 12/31/11
Ending Cash Balance$128.7
Cequel Communications, LLC Revolver                          -
Cequel Communications, LLC Term Loan1,941.4
Cequel Notes ($1,825.0 notional)1,845.3
Capital Leases and Other Obligations10.2
Total Debt$3,796.9
Cequel Holdings Preferred Interests$101.8
2011 Full Year Capital Expenditures$368.0
Capital expenditures for 2012 are expected to be between $325 and $345 million, including Project Imagine. 

Cequel Communications Holdings I, LLC
Preliminary Financial Information - Pro Forma Results
Fourth Quarter and Full Year 2011
(all dollar amounts in millions, except per customer amounts)
(unaudited)
Pro Forma Operating Results
Q4 2011Q4 2010Growth
Revenue$489.7 $462.9 5.8%
Adjusted EBITDA (range) (a)$188.0 - 191.0$172.8 8.8% - 10.5%
Average Revenue per Unit$129.31 $118.23 9.4%
FY 2011FY 2010Growth
Revenue$1,929.9 $1,802.7 7.1%
Adjusted EBITDA (range) (a)$715.0 - 718.0$658.2 8.6% - 9.1%
Pro Forma Adjusted EBITA (range) (b) $723.0 - 726.0
(a)  Adjusted EBITDA is a non-GAAP financial measure defined as net income/(loss), plus interest expense, provision for income taxes, depreciation, amortization, non-cash share based compensation expense, (gain)/loss on sale of cable assets, loss on swap termination and loss on extinguishment of debt.
(b)  Pro Forma Adjusted EBITDA, as defined in our credit facility and bond indenture, allows for the add-back of certain one-time and non-recurring expenses 

Pro Forma Customer Metrics
Ending Units 12/31/11Ending Units 12/31/10Q4'11
Net Gain
FY'11
Net Gain
Revenue Generating Units:
Basic video customers    1,252,200     1,297,700        (16,100)       (45,500)
Digital video customers      767,300       696,500         13,700         70,800
Residential high-speed
     Internet customers
      951,400       886,300         14,200         65,100
Residential telephone customers      438,600       377,700         12,500         60,900
Total Revenue Generating Units    3,409,500     3,258,200         24,300       151,300

Customer Relationships:At 12/31/11At 12/31/10
Total Customer Relationships          1,373,900           1,370,300
Double Play Relationships             527,800              517,600
Double Play Penetration38.4%37.8%
Triple Play Relationships             321,900              281,900
Triple Play Penetration23.4%20.6%
Total Bundled Relationships             849,700              799,500
Bundled Penetration61.8%58.3%
Non-video customer relationships             218,300              181,300
Non-video as % of total customer relationships15.9%13.2%

Commercial Customers:Ending Units at 12/31/11Ending Units at 12/31/10Q4'11
Net Gain
FY'11
Net Gain
Commercial Internet            46,500             42,500             900          4,000
Commercial Telephone            18,100             11,900          1,500          6,200

Cautionary Note Regarding Forward-Looking Statements

Some statements contained herein, including the Preliminary Financial Information, are known as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements may relate to, among other things:

  • competition for video, high-speed Internet and telephone customers;
  • the Company's ability to achieve anticipated customer and revenue growth and to successfully introduce new products and services;
  • the Company's ability to complete Project Imagine and other capital investment plans on time and on budget;
  • greater than anticipated effects of the current, or any future, economic downturn or other factors which may negatively affect its customers' demand for the Company's products and services;
  • increasing programming costs and delivery expenses related to the Company's products and services;
  • changes in consumer preferences, laws and regulations or technology that may cause the Company to change its operational strategies;
  • the Company's ability to effectively integrate acquisitions and to maximize expected operating efficiencies from its acquisitions;
  • the Company's substantial indebtedness;
  • the restrictions contained in the Company's financing agreements;
  • the Company's ability to generate sufficient cash flow to meet its debt service obligations;
  • fluctuations in interest rates which may cause the Company's interest expense to vary from quarter to quarter; and
  • other risks and uncertainties, including those listed under the caption "Risk Factors" in the Company's Annual Report for the year ended December 31, 2010.

These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained herein that are not historical facts. When used herein, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to the Company and speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in the Company's subsequent reports furnished to holders of its 8.625% senior notes due 2017.

Source: Cequel Communications Holdings I, LLC

Cequel Contact Information

Mary Meduski
EVP and Chief Financial Officer
314-315-9603
mary.meduski@suddenlink.com

Ralph Kelly
SVP and Treasurer       
314-315-9403
ralph.kelly@suddenlink.com

Mike Pflantz
VP, Corporate Finance
314-315-9341
mike.pflantz@suddenlink.com

- END -





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Source: Cequel Communications Holdings I, LLC via Thomson Reuters ONE

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