Filed under: Media
In Aug-02 The Carlyle Group and Welsh, Carson, Anderson & Stowe agreed to acquire Qwest Communication International’s directory publishing business: Qwest Dex for a total amount of US$7.05bn (excluding fees and expenses). This implied a multiple of 451% of restated 2001 revenues (US$1,53bn), 7.1 times restated 2001 EBITDA (US$993m, 65% margin!), 7.3 times restated EBITA (US$969m, 63% margin).
The transaction was divided in two parts: unregulated directories (Dex Media East) and regulated directories (Dex Media West). Dex Media East was acquired in Nov-02 for US$2.75bn in cash, based on a multiple of 7.4 times baseline adjusted EBITDA. Dex Media West was acquired in Sep-03 for US$4.29bn. This implied a multiple of 6.5 times 2001 baseline adjusted EBITDA.
The acquisitions were financed with a total of US$3.39bn in senior secured term loans (senior debt 3.4x 2001 EBITDA), two US$100m revolvers, US$2.14bn in senior subordinated notes (total debt 5.6x EBITDA) and approximately US$1.62bn in equity from the sponsors (approximately 80/20 debt to equity).
In Nov-03 and Feb-04 a red hot high yield market allowed Dex Media, Inc. to pay dividends of US$750.2m and US$250.5m from the proceeds of three newly issued loan notes of which approximately US$500m in the form of unsecured senior subordinated discount notes due November 2013 (in other words: all the way in the back of the line and no cash interest until May-09).
In May-04 Dex Media, Inc. filed for a public offering of US$1.5bn worth of primary and secondary shares. Pro forma EBITDA in 2003 amounted to US$921m, down over 7% from 2001 as the margin decreased from 65% in 2001 to 56% in 2003 on a 6.6% increase in revenue.
On 28-Jan-03 Dutchtone Group N.V. (86% owned by France Telecom S.A.) transferred all of the shares in the capital of Dutch cable TV operator N.V. Casema (‘Casema’) to a consortium of Carlyle Group (46%), Providence Equity Partners (46%) and GMT Communications Partners (8%) in exchange for the repayment and termination of a €665m credit facility provided by France Telecom. France Telecom was obliged to inject €131.4m in equity into Casema in order to clear all external debt prior to the sale (€163.3m). This resulted in net cash proceeds to France Telecom of approximately €502m.
The €665m total consideration implied the following multiples for 2002: 283% of turnover (€235m, 0.37x net tangible capital turn), 7.5x EBITDA (€88m, 37.5% margin), 1.0x net tangible capital employed (€634m at 31-Dec-02). Casema lost €16m before interest tax and amortization of goodwill in 2002.
The transaction was financed with €363m in equity, and a €475m credit facility (5.4x EBITDA, of which €335m was taken up at 28-Jan-03: 3.8x EBITDA) consisting of €425m in senior secured term loans and a €50m revolver. The credit facility had an estimated 59% debt-to-value ratio. The transaction valued each of the 1.367,000 subscribers at €486.
This deal was concluded after an agreement in Aug-02 to sell Casema to Liberty Media Corporation (‘Liberty’) for €750m expired when it became clear that it would be blocked by Dutch regulators in Nov-02. This deal was a long shot as Liberty already controlled 40% of the Dutch cable TV market through its ownership of a controlling stake of 53.1% (66.5% after restructuring) in the capital of United Pan-Europe Communications N.V. (‘UPC’). Adding Casema’s 20% market share would result in Liberty controlling approximately 60% of cable TV connections in The Netherlands and close to 100% of cable TV connections in its key western provinces (the densely populated Randstad region).
Filed under: Media
In Feb-99 The Blackstone Group (‘Blackstone’) acquired a 39.8% interest in U.S. cable television operator Bresnan Communications Group L.L.C (‘Bresnan’) – in relation to Bresnan’s acquisition of certain cable networks from Tele-Communications, Inc. (‘TCI’) – for US$136.5m valuing the equity at approximately US$343m. Including US$855m in total indebtedness upon completion of the transaction the enterprise value of the transaction amounted to approximately US$1.2bn.
This implied the following multiples: 457% of revenue for 1998 (US$262m, 0.9x net tangible capital turn), 10.5x EBITDA for 1998 (US$114m – pro forma -, 43.5% margin), 12.9x pro forma EBITA for 1998E (US$93m, – based on our estimate of pro forma amortization of ‘franchise costs’ of US$33m in 1998, 35.4% margin), 4.0x net tangible capital employed at 31-12-98 (US$299m – pro forma -) and US$1,826 per subscriber at 31-March-99 (656,000).
The transaction was financed by US$513m in senior debt (4.5x EBITDA), US$345m in subordinates notes (7.5x total debt to EBITDA) and the US$136.5m equity contribution from Blackstone.
In Feb-00 Bresnan was sold to Charter Communications, Inc (‘Charter’) for an aggregate purchase price of approximately US$3.08bn (US$1.1bn in cash, approximately US$1.01bn in equity (equivalent to a 6.7% equity interest in Charter) and US$963m in assumed debt).
The sellers were smart enough to include an option to put the Charter shares to its controlling shareholder Paul Allen for approximately US$1.0bn in cash plus interest in early 2002. Anyone familiar with the share price development of Charter will not be surprised that the put option was subsequently exercised.
Filed under: Media
In Sep-03 affiliates of Candover Partners and Cinven acquired all of the shares of specialist-publishing group BertelsmannSpringer (‘BS’) from Bertelsmann AG through KAP Global BV (the holding company of Kluwer Academic Publishers (‘KAP’) acquired in Oct-02). The purchase price, free of debt, amounted to €1,05bn. Pension liabilities remained with Bertelsmann Springer.
The price implied the following multiples for 2002: 144% of sales (€731m), 11.0x EBITDA (€95m, 13% margin), 14.8x EBITA (€71m, 9.7% margin). N.B. amortization is not solely of goodwill but also of other intangible assets. BS was merged with KAP in Feb-04 creating the specialist publishing group Springer Science+Business Media.
