Cequel III, the St. Louis-based telecom management and investment firm headed by former Charter Communications Inc. CEO Jerry Kent, and Classic Holdco LLC announced an agreement to acquire and assume management of 81,000 subscribers in nine states from Alliance Communications Partners for $81 million.
With this deal, three-year-old Cequel is now edging toward 500,000 subscribers.
The Alliance systems — located in Arkansas, Illinois, Indiana, Missouri, Maryland, Ohio, Pennsylvania, Tennessee and West Virginia — are owned by a consortium of banks and private equity firms and are managed by R&A Management, formerly Rifkin Associates.
According to a press release, the deal is expected to close by the fourth quarter and is supported by a majority of Alliance's existing lenders and interest holders.
The deal also will be a key component of Alliance's court assisted restructuring and liquidation plan, expected to be filed with the U.S. Bankruptcy Court in Delaware on Sept. 8.
Denver-based cable investment banker Daniels & Associates represented Alliance in the transaction.
Alliance has been on the block for more than a year. Last year, Buford Media Group president Ben Hooks signed a letter of intent to purchase the systems, but could never work out a deal.
Sources in the cable investment-banking community have said in the past that the systems are in need of upgrade, and had estimated the value of the properties at between $500 and $800 per subscriber.
Cequel and Classic Holdco — the holding company for Classic Communications, the St. Louis-based MSO which Cequel also manages and has a small interest in — paid about $1,000 per subscriber for the systems. But cable system valuations have risen substantially in the past few months.
The Alliance deal would increase the number of subscribers owned or managed by Cequel to about 430,000.
Aside from the 325,000 subscribers Cequel manages through Classic, it reached a deal earlier this year to purchase 27,000 subscribers in suburban Houston from Shaw Communications Inc. for $85 million.