Cogeco's Atlantic Broadband seals buy of WOW! broadband systems in Ohio

Sept. 2, 2021
The transaction with Atlantic Broadband is one of two separate, previously announced agreements for WOW! to sell a total of five service areas for gross proceeds of $1.8 billion.

Cogeco Communications Inc. (TSX: CCA) on Sep. 1 announced that its U.S. subsidiary cable operator Atlantic Broadband has completed its acquisition of the broadband systems of WideOpenWest, Inc. (WOW!) located in Columbus and Cleveland, Ohio.

The transaction with Atlantic Broadband is one of two separate, previously announced agreements for WOW! to sell a total of five service areas for gross proceeds of $1.8 billion.

WOW!'s other agreement to sell its Chicago, Evansville, Indiana, and Anne Arundel, Maryland, service areas for $661 million to Astound Broadband (dba RCN, Grande Communications and Wave Broadband) remains on track to close in the fourth quarter of 2021.

From the sale of its Cleveland and Columbus, Ohio service areas, WOW! said it expects to use approximately $1.0 billion in net proceeds to pay down a portion of the company's debt.

The divestitures will strengthen WOW!'s financial position, the company said, while helping to accelerate WOW!'s broadband-first strategy, which it noted includes additional investments in edge-outs, greenfield strategies and commercial services.

Atlantic Broadband expansion and transition

With the closing of the announced transaction, Atlantic Broadband is expanding its activities in Ohio and significantly growing its customer base. The acquired broadband systems passed approximately 688,000 homes and businesses in Cleveland and Columbus and served around 196,000 Internet, 61,000 video and 35,000 telephony customers, as of March 31, 2021.

"We are excited to welcome WOW! customers and colleagues to Atlantic Broadband as we continue to make major progress in our growth strategy," said Frank van der Post, President of Atlantic Broadband. "We will work to provide an easy transition for our customers as we integrate operations in the short term and, in the years ahead, we look forward to introducing innovative service enhancements that will ensure our continued leadership in these markets."

Cogeco reported that the deal's purchase price and transaction costs were financed through the issuance of a US$900 million secured Term B loan by Atlantic Broadband and excess cash on hand. The secured Term B loan will mature on September 1, 2028 and has been priced at an annual interest rate of LIBOR + 2.50%.

In the short term, Cogeco said the acquired operations will continue to operate under the WOW! name and trademark and be rebranded following the integration period.

"This acquisition significantly advances our market expansion strategy in the United States," commented Philippe Jetté, President and Chief Executive Officer of Cogeco Communications Inc. "We are looking forward to continuing to bring innovative services, competitive pricing, customer-centric support and operational excellence in these markets."

Since the transaction was initially announced in June of 2021, WOW! said it has been preparing to transition employees and customers in its Cleveland and Columbus, Ohio, service areas to Atlantic Broadband. As such, WOW! has entered into a Transition Services Agreement with Atlantic Broadband to support post-transaction continuity of service during a transition period.

"The closing of this deal with Atlantic Broadband is a significant step in the execution of our broadband-first strategy, at a critical time in our industry," said Teresa Elder, CEO of WOW!. "Our strengthened balance sheet bolsters our ability to invest in key growth areas as we continue to provide reliable, accessible and fast broadband solutions to our customers across our remaining service areas. And we are confident that Atlantic Broadband will be a good steward for our Ohio service area employees and customers."

BofA Securities is acting as financial advisor to WOW! in the dealings, and Wachtell, Lipton, Rosen & Katz, as well as Honigman LLP, are serving as legal counsel.

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