Cablevision Sets Date For Shareholder Vote
Family Could Shed Assets to Fund Deal
By Mike Farrell -- Multichannel News, 9/13/2007 2:06:00 AM MT
Cablevision Systems has set a date for the shareholders meeting to vote on its ruling Dolan family’s $10.6 bilion proposal to take the cable operator private, adding that the family may be willing to sell assets or shut down money losing businesses to finance the deal, according to a Securities and Exchange Commission filing Thursday.
According to the proxy statement filed Sept. 13 with the SEC, the meeting will be held on Oct. 24 at Cablevision headquarters in Bethpage, N.Y. at 11 a.m.
This is the third proxy that Cablevision has filed in relation to the Dolan offer – it filed previous proxies in June and August. But this one is different in that the family has admitted that it would possibly sell assets to raise money to finance the deal.
In its proxy statement in August, Cablevision said that in light of the credit crunch in the debt markets, interest costs and transaction fees from investment bankers Bear Stearns, Merrill Lynch and Bank of America (who are providing up to $15 billion in financing to fund the deal and for future working capital) could get significantly higher.
In the most recent proxy, Cablevision said that given the possibility of those increased costs, the Dolan family is considering several actions to reduce the company’s overall leverage.
“Those actions will be taken in a manner consistent with the Dolan Family Continuing Investors’ obligations under the merger agreement and such steps may include, among others, selling assets, entering into strategic partnerships, reducing operating expenses and/or discontinuing certain businesses which do not currently generate positive cash flow,” Cablevision said in the proxy statement.
The company did not identify those assets, but speculation in the past has been that they could include its Rainbow Media Holdings programming unit – which holds the AMC, IFC and WE: Women’s Entertainment cable networks.
The company also revealed that management conducted a sensitivity analysis of competition with Verizon Communications, which has been rolling out its FiOS voice, video and data service in Cablevision territory, and concluded that any FOS subscriber gains could be offset by modest rate increases and cost containment.
According to that analysis, Cablevision assumed that FiOS would pass about 1.6 million Cablevision homes by the end of 2011 and that the telco’s service would ultimately achieve 10% video penetration. The analysis, conducted earlier this month, also estimated that FiOS passed 1.080 million homes in Cablevision’s service territory at the end of August.
Management also prepared sensitivity analyses assuming Verizon FiOS systems pass approximately 1.6 million homes and reaches either 15% or 20% video penetration. The negative impact of these changed assumptions on projected adjusted operating cash flow is offset or substantially offset by the impact of a revised assumption of higher annual rate increases in the range of 3-4%, and other assumption changes, such as cost controls, that management believes are within its ability to execute. However, the company said there can be no assurance that Cablevision would actually implement such rate increases, cost controls or other changes or that such actions would lead to the impacts reflected in the sensitivity analysis.
Pali Research analyst Richard Greenfield said in a research note that setting the date in October should give the company time to close the deal before third quarter results are released – which the analyst expects to be healthy – and could make it easier to win shareholder approval. However, he added that investors could be upset that Cablevision would wait until after the deal closes to reduce leverage rather than doing it now.
But, Greenfield added that the moves show that the Dolan’s have no intention of giving up the transaction.
“The Dolans REALLY want to be private,” Greenfield wrote.
Cablevision stock was up 76 cents each in early trading Thursday to $34.56, still well below the Dolans offer of $36.26 per share.
Discovery Sets Date For Shareholder Vote
08/06/2008Cablevision Eyeing Rainbow Sale?
02/25/2008Dolans Mull Asset Sales
09/16/2007Cablevision Hits Five-Year High
07/05/2007Maverick Plays and Wins by Its Own Rules
09/23/2007
