For at least the past two years, cable operators have said that private-equity firms were itching to get back into the industry — a sector many of them sold out of when system valuations peaked in the late 1990s.
But while many such firms sniffed around, few were motivated enough to bite hard.
That might be changing. Private-equity firms have participated in several recent acquisitions. They include Providence Equity Partners, which helped back Bresnan Communications' $675 million purchase of 317,000 subscribers from Comcast Corp. and several European cable deals; and Spectrum Equity Investors, which joined Patriot Media & Communications in its $289 million purchase of RCN Corp.'s Princeton, N.J., operation.
Last week, another private investor, Nautic Partners LLC, helped fund an $88 million recapitalization of Gans Communications LP, formerly Gans Multimedia Partnership.
Gans received about $38 million in private equity from Nautic and certain affiliates. It also secured a $50 million senior debt facility from General Electric Capital Corp. and National City Bank.
Denver cable investment banker Daniels & Associates represented Gans in both the equity and debt placements.
The recapitalization will refinance existing senior debt and provide additional capital to finance the rebuild of the Gans cable systems in Pennsylvania, Maryland and Virginia. Those systems serve about 50,000 basic subscribers.
The rebuilds will bring the systems to a combination of 860 Megahertz and 750 MHz plant, Gans said in a statement.
Wanted to stay
Gans president Joseph Gans III "had to make a decision last year whether to exit the business or recapitalize, and his strong preference was to stay in," Daniels executive vice president Greg Ainsworth said. "We tried to say, it would be a lot easier just to sell."
But Gans was determined — and was able to add a surprising amount of senior debt, especially at a time when lenders are looking to work down their portfolios, Ainsworth said.
Ainsworth said he doesn't expect to see a huge flurry of private-equity deals in the immediate future.
"What that may do is convince a lot of fence-straddlers to go ahead and put the 'For Sale' sign on," Ainsworth said.
"Some of these potential sellers have been reluctant to do deals," he added. "But as the transaction price picks up and they see values start to look stronger, it puts some confidence in the market to pursue a transaction."