Wave Hits Sales Block


While the auction for Bresnan Communications
winds down, another is beginning to take shape.
Books on Wave Broadband Holdings, the Seattle-based
MSO, were expected to go out last week. New York-based
Waller Capital and Denver-based RBC Daniels are serving
as co-managers of the deal.

Wave is essentially looking for a new backer to replace
New York private equity firm Sandler Capital and to help
fi nance future growth.

Wave has about 320,000 voice, video and high-speed
data subscribers, mainly bordering Comcast properties in
Portland, Ore; Seattle; and San Francisco and Sacramento,
Calif. That proximity to a large operator also offers potential
buyers a future exit path, according to people familiar
with the company.

The systems are also generating
about $100 million in annual
cash flow, people familiar
with the company said. Applying
an average deal multiple of
between seven and 10 times
cash flow could mean the systems
are worth between $700
million and $1 billion and
could be worth even more.

Sandler Capital was an early
backer of Wave and its founder
and CEO, former Millennium
Digital Media executive Steve
Weed, in 2003 and owns about 90% of its equity. While Wave
would not reveal how much Sandler invested initially, the
cable company raised about $70 million in initial financing
in 2003, including about $32.5 million in equity.

Wave systems are fully upgraded and offer high-speed
data and phone service, but some markets — like the Portland
area — only began offering the triple play last year, so
there’s ample room for growth.

Weed grew Wave through a mixture of deals — he
bought Northland Cable, Avenue Cable and systems
from Charter Communications and Knology in the span
of about four years — and organic growth. In an interview
last month, Weed said the company would like to
continue on that path.

“We’re built for acquiring and integrating cable systems
and we want to continue doing that,” Weed said in May.