RCN To Be Acquired For $1.2 Billion


RCN will be acquired by investment fund ABRY Partners for about $1.2 billion in cash, the companies announced Friday.

ABRY has agreed to pay $15 per share for RCN, representing a 43% premium over RCN's average closing share price during the past 30 trading days and a 22% premium over the closing share price on Thursday, March 4. Financing for the transaction -- which includes the assumption of RCN's debt -- comprises a combination of equity to be invested by ABRY and debt financing to be provided by SunTrust Robinson Humphrey, GE Capital, Societe Generale and certain of their affiliates, the companies said.

As of Sept. 30, RCN had $729.7 million in long-term debt and capital lease obligations.


The transaction is expected to be completed in the second half of 2010, subject to stockholder and regulatory approvals. As a result of the deal, RCN said it will not hold a fourth quarter 2009 results conference call, which had been previously scheduled for Tuesday, March 9.

RCN, created in 1997 as a video, data and phone competitor to cable and telco operators, went through a Chapter 11 reorganization in 2004.

RCN's primary service areas include New York City; Washington, D.C.; Philadelphia; Lehigh Valley, Pa.; Boston; and Chicago. The Herndon, Va.-based company had 367,000 video customers as of Sept. 30, 2009.

Boston-based ABRY's current cable investments include Atlantic Broadband and Grande Communications, which Atlantic Broadband is managing. Past cable investments include Avalon Cable and WideOpenWest.

Overall, ABRY has completed over $21 billion of leveraged transactions and other private equity and mezzanine investments since 1989, representing investments in more than 500 media and communications properties.

Under the terms of the agreement with ABRY, RCN may solicit proposals from third parties for 40 days -- through April 14 -- for alternate bids. However, RCN said it does not intend to disclose developments with respect to this solicitation process "unless and until its board of directors has made a decision."

On the RCN side, Deutsche Bank Securities and Waller Capital Partners acted as financial advisors to the operator's board of directors with respect to the transaction. Jenner & Block LLP acted as legal counsel to RCN.

SunTrust Robinson Humphrey acted as exclusive financial advisor to ABRY and will also serve as Left Lead Joint Bookrunner and Administrative Agent for the debt financing. GE Capital Markets and SG Americas Securities will also act as Joint Bookrunners for the debt financing. Edwards Angell Palmer & Dodge LLP acted as counsel to ABRY Partners.