On Feb. 2, Shenandoah Telecommunications Company (Shentel - NASDAQ: SHEN) announced that the appraisal process related to the purchase option for Shentel’s wireless assets and operations previously exercised by T-Mobile US, Inc. has been completed.
According to a press release, in accordance with the terms of the management agreement and through a process with three independent valuation providers, the purchase price (based on a calculation of 90% of “Entire Business Value” and inclusive of the unrealized Sprint waived management fee) for Shentel Wireless was determined to be $1.95 billion in cash, subject to customary purchase price adjustments.
Shentel and T-Mobile had previously agreed that the determination of “Entire Business Value” through the just completed appraisal process is final and binding. Shentel and T-Mobile expect to enter into a definitive asset purchase agreement during the first quarter 2021 and expect the transaction will close in the second quarter 2021 after satisfying customary closing conditions and obtaining required regulatory approvals.
Shentel currently expects that the after-tax proceeds from the sale of Shentel Wireless will be approximately $1.5 billion. The transaction will be accounted for as an asset sale for income tax purposes.
Shentel said it currently expects to use the proceeds from the sale to, as required by Shentel’s credit agreement, repay approximately $702 million of outstanding term loans and swap liabilities and terminate the respective agreements. Shentel said it also expects to use the proceeds to issue a special dividend of $18.75 per share to Shentel’s shareholders; to provide adequate liquidity for growth and potential strategic acquisitions; and to provide liquidity for general corporate purposes.
Shentel expects to pay the special dividend in the second quarter 2021 after the close of the Shentel Wireless transaction, subject to the approval of Shentel’s board of directors.
"We are pleased to provide clarity on the expected sale price of Shentel Wireless and our ability to return significant value to our shareholders,” said Shentel's president and CEO, Christopher E. French. “The expected transaction closing in the second quarter along with the continued rapid expansion of our Glo Fiber to the Home and Beam fixed wireless services are part of our transformation to a broadband centric company. Shentel has a long history of growth and technology innovation and we are very excited about the new opportunities to bring state-of-the-art broadband to our customers and create value for our shareholders.”
For more information, visit www.shentel.com.