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Suddenlink Agrees to Buyout Led by Management, BC, CPP

Suddenlink Agrees to Buyout Led by Management, BC Partners, CPP
A newly formed subsidiary of Suddenlink has entered into a commitment letter with Credit Suisse Group AG for $500 million of senior unsecured bridge loans, according to the statement. Photographer: Gianluca Colla/Bloomberg

BC Partners Ltd. and Canada’s second-biggest pension fund agreed to buy U.S. cable operator Suddenlink Communications for $1.99 billion from a group of investors that includes Goldman Sachs Group Inc.

BC Partners is making the purchase together with Canada Pension Plan Investment Board and a management team led by Suddenlink Chief Executive Officer Jerry Kent, according to a statement from Cequel Communications Holdings LLC, which does business as Suddenlink. Including debt, the deal has an enterprise value of $6.6 billion, Cequel said.

Suddenlink, based in St. Louis, is the seventh-largest cable system operator in the U.S., according to the statement. In the 12 months ending March 31, the company generated $1.96 billion in revenue and $743 million in adjusted earnings before interest, taxes, depreciation and amortization. In addition to Goldman Sachs, the sellers include Quadrangle Group LLC and Oaktree Capital Group LLC.

“Suddenlink is one of the most attractive cable companies in the U.S. today, with a world-class infrastructure,” Raymond Svider, BC Partners co-chairman and managing partner, said in the statement. Svider also is chairman of Luxembourg-based Intelsat SA.

Cable Stocks

The deal helped drive up the price of other cable stocks today, including Cablevision Systems Corp., the fifth-largest U.S. cable provider. Cablevision shares rose 5.8 percent to $14.16 at the close in New York, its biggest one-day gain in nine months. Charter Communications Inc., the fourth-largest cable operator, gained 2.6 percent to $74.81.

Suddenlink’s buyers will assume net debt that stood at $4.09 billion as of March 31, as well as $500 million of “incremental debt,” according to the statement. Moody’s Investors Service held Suddenlink’s corporate family rating steady at B1, four levels below investment grade.

Total private-equity takeovers are happening at a slower clip than in 2011. The acquisitions have reached $61 billion worldwide this year, compared with $144 billion for all of 2011, data compiled by Bloomberg show.

BC Partners, the British private-equity owner of gym operator Fitness First Ltd., teamed up with Blackstone Group LP to bid for Iglo Foods Group Ltd. in June. Iglo’s owner, Permira Advisers LLP, called off the sale this month after deeming the bids too low, people familiar with the matter said.

Credit Suisse

A newly formed subsidiary of Suddenlink has entered into a commitment letter with Credit Suisse Group AG for $500 million of senior unsecured bridge loans, according to the statement. Suddenlink expects to use the proceeds to fund a portion of the purchase price.

Suddenlink offers television, high-speed Internet and telephone services to more than 1.4 million residential and commercial customers, primarily in Texas, Oklahoma, Arkansas, Louisiana, North Carolina and West Virginia.

The deal follows Cogeco Cable Inc.’s agreement to buy Atlantic Broadband, which operates cable systems in Pennsylvania, Florida, Maryland, Delaware and South Carolina, for $1.36 billion. That purchase will let Cogeco expand into the U.S. after a failed attempt to gain a foothold in Europe.

The Suddenlink acquisition values the company at 8.5 times 2012 earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg Industries. The Cogeco deal valued Atlantic at 8.3 times.

Both multiples are “far above public equity valuations,” according to Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York.

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