Share This Story  |   Comments (0)

Telecommunications provider SureWest Communications Inc. on Friday moved to more than double its customer base, agreeing to acquire privately held Everest Broadband Inc. for $173 million in cash.

Everest, a portfolio company of New York-based Seaport Capital LLC, provides high-speed data, video and voice services in the Kansas City area. Seaport bought the company in 2006 from Kansas City utility Aquila Inc. for $86 million.

Roseville, Calif.-based SureWest offers IP-based digital video, high-speed Internet and local, wireless and long distance phone services to customers in its home Sacramento-area market. The company said that the deal would more than double its residential subscriber base and help it build its business services, giving the combined company more than 200,000 revenue generating units spread over California, Missouri and Kansas.

"The Everest transaction significantly accelerates our growth and geographic diversification strategy by adding Everest's rapidly expanding customer base in the greater Kansas City area to our northern California service territory," SureWest CEO Steve Oldham said in a statement. "We believe we can successfully leverage our industry-leading experience in building and operating networks to provide superior service to new and existing business and residential customers, which in turn will improve long-term shareholder return."

The combined company would have generated Ebitda of $21 million on sales of $66.5 million in the third quarter, according to SureWest.

UBS Investment Bank Inc. served as financial adviser to SureWest, while Orrick, Herrington & Sutcliffe LLP provided legal advice. Everest was advised by Waller Capital Partners and attorneys from O'Melveny & Myers LLP.

SureWest said it plans to finance the transaction through a combination of cash on hand and committed debt financing from CoBank ACB. The combined company is committed to capital expenditures over the next three years to include additional network build-out in the Sacramento and Kansas City areas.

In addition to its debt financing, the company has also been using asset sales to raise cash. Earlier this year SureWest sold its directory business to GateHouse Media Inc. of Fairport, N.Y., for $110 million. The company said it is also in negotiations to sell its wireless business.

The deal is expected to close by the end of the first quarter 2008, subject to regulatory approval.

---

Post a comment

Name:

Email Address:

URL:

Remember personal info?

Comments: (you may use HTML tags for style)

Please only click "Post" once. It may take a few moments to process.