West Face Group Poised for Sixfold Return on Wind Sale to Shaw

  • C$1.6 billion purchase follows C$260 million investment
  • Backers include West Face, Tennenbaum Capital, Globalive

West Face Capital Inc. and other funds stand to make about a sixfold return on their investment in Wind Mobile Corp. with the sale of the Canadian wireless operator to Shaw Communications Inc. for C$1.6-billion ($1.2 billion), according to people familiar with the matter.

A group led by West Face Capital, a Toronto-based hedge fund, agreed to recapitalize Wind in September 2014 and has invested about C$260 million in 14 months, the people said. The group, known as Mid-Bowline Group Corp., includes Tennenbaum Capital Partners, the family office of Lawrence Guffey, and Wind founder Anthony Lacavera’s Globalive Capital.

The C$1.6 billion enterprise value ascribed to Wind in the Shaw deal includes very little debt, the people said. As a result, the equity portion will return about six times on the total investment, said the people, who asked not to be identified because the matter is private.

The wireless carrier, with the backing of Mid-Bowline, has embarked on an expansion across the country, including acquiring 30Mhz of wireless spectrum in a government auction in March. Toronto-based Wind is Canada’s fourth-largest wireless carrier, with 940,000 subscribers and forecast revenue of C$485 million this year. Earnings before interest, taxes, depreciation and amortization will be about C$65 million in 2015, according to figures in a slide presentation by Shaw Thursday.

Brad Shaw, Shaw’s chief executive officer, declined to explain the specific breakdown of the debt and equity portion of its purchase price on a conference call.

Calgary-based Shaw plunged 8.8 percent to C$24.60 at 11:06 a.m. in Toronto, the biggest one-day drop in seven years.

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