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Archive for Wednesday, August 4, 2010

Knology statement on its pending purchase of Sunflower Broadband

August 4, 2010

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Subsequent to quarter end, Knology executed a definitive agreement to acquire the assets of Sunflower Broadband ("Sunflower"), a provider of video, voice and data services to residential and business customers in Douglas County and Lawrence, Kansas for $165 million cash. The transaction is expected to close during the fourth quarter of 2010, subject to certain closing conditions, including regulatory approvals.

Sunflower is expected to generate approximately $51 million in revenues and $22 million in EBITDA, pre-synergies, for calendar year 2010. Synergies are expected to be approximately $5 million. The contemplated transaction is structured as an asset purchase and provides Knology with a valuable step-up in the tax basis of the assets acquired.

Knology expects to fund the proposed transaction by using a portion of its cash on hand and by accessing the capital markets in a manner which will allow it to manage the leverage profile of the business, while maintaining the flexibility to continue to grow the business with a disciplined approach.

Highlights of the Sunflower transaction include:

-- Acquisition of a very well managed business with solid operational and financial metrics

-- Maintains Knology's strategic niche, operating in secondary and tertiary markets with favorable demographics and positive economic growth characteristics

-- Consistent culture and value system with focus on customers and employees

-- Similar hybrid fiber/coax network architecture

-- Incumbent cable operator, adding approximately 54,000 homes passed to Knology's existing footprint and approximately 105,000 RGU's to Knology's operations

-- Geography offers attractive edge-out possibilities, tack-on acquisition and larger acquisition opportunities bridging Knology's southeast and upper Midwest footprints

SunTrust Robinson Humphrey is acting as financial advisor to Knology and RBC Daniels is acting as financial advisor to Sunflower Broadband. Credit Suisse and SunTrust Robinson Humphrey have fully committed to provide the required debt capital for the contemplated acquisition by Knology of Sunflower Broadband.

Comments

rbs 4 years, 4 months ago

So basically, this says nothing. . .

DillonBarnes 4 years, 4 months ago

Ha ha, yep. I was hoping for a re-assuring prepared statement about how jobs would be kept, and service would only improve. It might have been a load of bull but it's what I wanted to hear. Instead I get this.

overthemoon 4 years, 4 months ago

What do you mean? The synergies and the incumbent geography are great. What more do you need to know?

This isn't a press release statement, its a market analysis. I'd kind of expected a hey there howdy ya'll kind of statement.

whats_going_on 4 years, 4 months ago

I don't think they were ever worried about that...

wdl 4 years, 4 months ago

I am not to well read when it comes to business speak. Would someone break down the third paragraph in this news release and explain in English what it means.

lgreen17 4 years, 4 months ago

They are going to use money they have in the bank, and borrow money, but not too much so they can put money into the business. In other words, prices will go up.

Kontum1972 4 years, 4 months ago

hopefully the buyout is all in one's....looks more impressive..LoL!

how many aromored cars will it take to haul all this dough?

whynaut 4 years, 4 months ago

So what happens to the World Company after it sells off it's cash cow?

LogicMan 4 years, 4 months ago

Well this should give them a bunch of cash for the newspaper, and hopefully this Website, to survive for many years.

vuduchyld 4 years, 4 months ago

Wow...EBITDA is basically 40% of revenues? Impressive.

Impressive enough for somebody to pay 8x EBITDA, anyway!

4 years, 4 months ago

Hopefully my cable signal will get better......probably get worse, great.

Keith 4 years, 4 months ago

"Synergies are expected to be approximately $5 million."

Some of those synergies will be looking for work in the Lawrence area.

Ryan Wood 4 years, 4 months ago

$22 million EBITDA?! And World Company employees are taking pay cuts?

overthemoon 4 years, 4 months ago

well, yeah. Hey lots of businesses are forcing employees to take paycuts as their profits increase. Its kind of the thing to do these days, what with number of unemployed who will work for peanuts. Shoot, why not cut pay while the company rakes in cash?

Ryan Wood 4 years, 4 months ago

Those workers helped you make $22 million in profit, and that's how you thank them?

When the economy recovers, good luck keeping any of them.

uncleandyt 4 years, 4 months ago

acquisition opportunities shall bridge the footprints I hope Knology isn't wearing clown shoes.

Christine Anderson 4 years, 4 months ago

Okay, you turdwads. What we needed to know is: 1) How much of a rate hike will we be treated to? 2)Are you going to call all Sunflowers' customer service reps in and tell them they are fired because the "new boss" has arrived?

Stink, stank, stunk!

hawkman8950 4 years, 4 months ago

guess i'll go old school and listen to radio from here on out

LogicMan 4 years, 4 months ago

For near-free you could put up a TV antenna, and maybe even receive an HD channel or two.

EJ Mulligan 4 years, 4 months ago

This surely is not the PR that Knology wants today. Not even a quote from a human being with the company? Image is as important as dollars, especially in a situation like this. Not a good first impression here...

kristyj 4 years, 4 months ago

but whatever shall happen to Broadband Man?

LogicMan 4 years, 4 months ago

He'll have a southern accent from now on.

Or even better be replaced by Daisy, the Broadband Bell. :-)

Christine Anderson 4 years, 4 months ago

Hmmmm...I say we all find out Knology's email and start letting them know that if the quality of customer service goes down, the prices go up, and most importantly, if they take away the jobs of the very hard-working people they already have at Sunflower, those of us dissatisfied will bolt for other providers. Then see just how successful the merger is.

LogicMan 4 years, 4 months ago

Instead, why not give them a chance to implement their ideas? Who knows, maybe the quality and value will improve for customers by being part of a bigger company.

bearded_gnome 4 years, 4 months ago

Logicman, problem is: they're admitting right here that to buy lil' ol' Sunflower broadband, they're goin' inta a lil debt. guess who'll be a'payin' the interest?

them georgia boys puts up a little money, charge us to buy our system, they gets thar money back quick, our rates jes don't go down never.
maybe that helps esplain the bidness speak?


I am quite sad to see this sale take place. Sunflower has been a wonderful provider and apparently a good local employer. I've generally been pleased with their service.

does anyone think that "Knology" will really keep the same or more employees on the lawrence payroll?
... yeah riiiight.

cdecoito 4 years, 4 months ago

If you are interested in Knology rates, check out their website and read up. They are far more affordable than Sunflower, and they don't have ridiculous bandwidth caps that can cost several customers hundreds of dollars in overage charges. Sunflower is far and away one of the most expensive cable/broadband companies in comparison to others that serve areas in the midwest, in counties the size of ours. And they got away with it for so long becaues there was no competition to drive their rates down. Now that there is a larger corporation involved and several competitors, one could argue that we will only see costs (long term) go down.

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