Searchlight currently owns approximately 34% of Consolidated’s outstanding shares of common stock, as well as the holder of 100% of the company’s outstanding Series A perpetual preferred stock. Under the terms of the Agreement, Searchlight and BCI will acquire all the Consolidated common stock not already owned by Searchlight for $4.70 per share in cash.
Robert J. Currey, the Chairman of the Consolidated Communications Board and the Special Committee Chair, said this sale was deemed the best option for the company.
“The Special Committee thoroughly reviewed their proposal, considering the benefits of the transaction against other strategic alternatives available to the Company, including continuing as a publicly traded company,” he said. “We also considered capital structure alternatives, analyzing the potential availability, cost and feasibility of injecting additional capital into the business. Following this review, the Special Committee determined this transaction is the best path forward for Consolidated Communications and its shareholders.”
Focus on fiber expansion
One of the possible benefits of going private is that Consolidated can further sharpen its focus on expanding its fiber network.
As of the end of the second quarter, Consolidated added 18,651 fiber customers, up from 9,643 fiber net adds in the same period last year. The provider also grew consumer fiber broadband revenue by 58% and increased ARPU 5.1.
It also upgraded 57,438 locations to fiber Gigabit+ speeds; fiber-to-the-premises (FTTP) coverage will approach approximately 50% of the addressable market by year-end.
Bob Udell, President, and CEO of Consolidated Communications said this deal will enhance its ability to expand its fiber network to more locations.
“We believe this transaction provides substantial value for our shareholders while also enhancing our flexibility to continue the execution of our fiber expansion strategy,” he said. “We have been operating in a shifting economic environment this past year, resulting in higher operating costs and a challenging market for attractive financing options.”
He added that while it has continued to expand its fiber reach, the build is anticipated to take longer than initially planned.
“While we are pleased with how we have managed the business despite these headwinds, several factors recently necessitated that we delay our estimated fiber build completion beyond 2026,” Udell said. “As we navigate this environment, we will have increased flexibility as a private company. Searchlight will remain an outstanding partner as we transform into a leading fiber-first provider.”
Consolidated will become a private company after the deal is completed in the first quarter of 2025.
The deal will have to meet customary conditions, including regulatory approvals and approval of the holders of most of the voting power represented by the outstanding shares that are entitled to vote thereon and held by shareholders other than Searchlight and BCI, their investment fund affiliates and the directors and officers of the company.
The transaction is not subject to a financing condition. Following the transaction's closing, Consolidated Communications common stock shares will no longer be traded or listed on any public securities exchange.
Consolidated’s third quarter 2023 earnings will be issued on November 7, 2023, but it will not host an earnings conference call considering the announced transaction.