Carlyle Pulls Insight Auction


Private equity giant The Carlyle Group has put its auction of Insight Communications on hold, apparently because some prices for the mid-sized cable company fell short of expectations and difficulties in obtaining debt financing for a deal.

One cable executive familiar with the auction process confirmed a report on the Wall Street Journal’s Web site, adding that “right now, the debt markets are wreaking havoc on big deals.”

Insight executives did not return a call for comment.

Carlyle, which invested about $2 billion for its stake in Insight in 2005 (including about $1.3 billion in debt) in a deal that took the once publicly traded cable operator private, put the cable company on the market earlier this year. Interested bidders included Time Warner Cable, several private equity players such as Providence Equity Partners and Oak Hill Capital Partners and smaller cable operators like Jerry Kent’s Suddenlink Communications.

Insight, which will have about 650,000 subscribers in Kentucky; Evansville, Ind.; and Columbus, Ohio once the previously announced split of its 50-50 Insight Midwest partnership with Comcast closes at the end of the year, was expected to attract prices in the $2.5 billion to $3 billion range. But according to WSJ, some bids came in about $200 million short of expectations.

However, according to another executive familiar with the auction, several companies did come in with bids in the $3 billion range (except for Time Warner), but could not pull the trigger on a deal because of the inability to raise debt financing. That executive said that negotiations are ongoing with those bidders, but that those talks are moot until the debt markets clear up.

Investment banker Morgan Stanley was heading up the auction along with New York-based cable investment bank Waller Capital. Reports in August that Morgan Stanley was pulling back its offer to provide some debt financing to private equity bidders – mainly because of the meltdown in the debt markets due to the sub-prime lending debacle – could have led to the decision to cancel the auction.

But the executive familiar with the auction said that most banks are scaling back lending for big deals, not just Morgan Stanley. He added that even if a deal is reached soon, it would be unlikely to close before the end of the year.