Insight Communications Co. Inc. said it would refinance all of the
outstanding debt of its Ohio operating subsidiary, Coaxial Communications,
through a new $900 million term loan -- a deal that will also force the company
to pay the former owners of Coaxial about $30 million.
In a press release, Insight said it would refinance the entire Ohio system’s
debt -- $140 million in 10% senior notes due 2006, $55.9 million of 12 7/8%
senior discount notes due 2008 and a $22.5 million senior credit facility --
through the refinancing of a $900 million term loan with a new $1.125 billion
But by refinancing the debt, Insight triggered a put option held by the three
former owners of Coaxial -- two Florida businessmen, Barry Silverstein and
Dennis McGillicuddy, and Columbus, Ohio-based businessman D. Stevens McVoy, who
cofounded Coaxial in 1968 -- for about $30 million.
Insight purchased 75% of Coaxial -- which operates a system in Columbus with
about 88,000 subscribers -- in 1998.
In August 2000, Insight bought the remaining 25% interest in Coaxial for $2.6
million in cash and 800,000 shares of its common stock. However, as part of that
agreement, Insight agreed to pay Silverstein, McGillicuddy and McVoy the
difference between $32.6 million and the value of the 800,000 shares of Insight
stock if the senior note or the senior discount notes were repaid or
That payment, UBS Warburg LLC cable debt and equity analyst Aryeh Bourkoff
said, was mainly for tax purposes.
Bourkoff added that the deal is a positive for Insight because it simplifies
its capital structure.
"The simplification of the capital structure is a positive in that the
company is preparing for a more competitive environment," Bourkoff said.
"Complex capital structures with high leverage are no longer appropriate."
Insight expects to close the deals during the current