Avalon Cable Raises $260M

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New York -- Avalon Cable LLC has raised a total of $260
million through two recent high-yield bond sales, bankrolling its $435 million acquisition
of Cable Michigan Inc.

Avalon completed a pair of junk-bond offerings Dec. 10 --
one, at the holding-company level, for $110 million; and the other, for $150 million, by
the operating company.

The holding company sold senior discount notes at 11.875
percent, while the operating company, Avalon Cable of Michigan, sold senior subordinated
notes at 9.375 percent. (Some of that information was reported incorrectly in the Dec. 14 Multichannel
News
.)

Avalon had been forced to withdraw a previous offering
after junk-bond markets virtually closed down due to global market instability. Several
high-yield deals have been completed recently, though.

"We're done with the financing," Avalon CEO
Joel Cohen said. Avalon -- which is controlled and mostly owned by ABRY Broadcast Partners
L.P., an investor group -- plans to invest in rebuilding the Cable Michigan systems, he
said, with a goal of having 85 percent of the plant upgraded to 550-megahertz or higher
capacity.

Avalon agreed to buy Cable Michigan, with 215,000
subscribers, in June. Its financing also includes a $320.9 million credit facility,
administered by Lehman Commercial Paper Inc., according to Securities and Exchange
Commission reports.

Avalon has also made a tender offer to Mercom Inc.
shareholders, seeking to buy their stock for $12 per share, or about $22 million in all.
Avalon already controls 62 percent of Mercom through Cable Michigan, which manages the
Mercom cable systems and their 41,000 subscribers.

Avalon also has cable systems with about 21,000 subscribers
in New England.

In other system transactions announced last week:

• Bloomfield Hills, Mich.-based James Cable Partners
acquired the 6,600-subscriber cable system in Tazewell and New Tazewell, Tenn., from
Fannon Cable TV Inc., according to the seller. Communications Equity Associates Inc.
represented Fannon.

• SunTel Communications LLC closed its purchase of
systems with 5,500 subscribers in Lake Altamanor, Calif., and Winnemucca, Nev., from Jones
Spacelink Fund 5. SunTel was formed by Sun Country Cable Inc. managers and New York-based
BG Media Investors L.P.

• FrontierVision Operating Partners and Susquehanna
Cable Co. traded cable systems serving 11,130 subscribers. FrontierVision got systems in
New Castle and Warren, Maine, and London, N.H., while Susquehanna got systems in Freeport,
Harpswell and Woodwich, Maine. Daniels & Associates Inc. brokered the deal.

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