Overbuilder SIGECOM is being sold to Avista Capital Partners, parent of overbuilder WideOpenWest, in a deal estimated to be worth about $115 million.
SIGECOM is owned by Utilicom, a partnership between Indiana electric and gas utility Vectren and private-equity group Blackstone Capital Partners.
The systems being sold represent about 27,000 subscribers in Evansville and Newburgh Ind., according to executives in the financial community familiar with the deal. At $115 million, the price represents about 8.2 times SIGECOM’s cash flow, or about $4,259 per subscriber.
SIGECOM entered the Evansville market in 1998 and enjoyed quick success -- incumbent cable operator Insight Communications had yet to offer digital-cable and high-speed-data service. But the company scaled back its ambitious buildout plans in 2004. SIGECOM had planned to expand its reach by building a 3,500-mile fiber-optic network in Indianapolis (passing 330,000 homes) and a 1,000-mile network in Dayton, Ohio (passing 108,000 homes), but it ran into trouble finding debt financing for the project.
According to Vectren’s 10-Q quarterly report, filed Aug. 4, the utility company said it stopped making investments in SIGECOM in 2004 and recorded a $6 million charge that year to write down its Utilicom investments to fair value. The company said in the filing that as of June 30, Vectren had invested about $45.6 million in Utilicom.
The deal comes about 100 days after Avista purchased WOW for an estimated $800 million. The SIGECOM systems also are expected to fit nicely with WOW’s properties in Indiana. After the deal is closed -- expected in the fourth quarter -- WOW will have about 1.4 million homes passed in Illinois, Indiana, Michigan and Ohio.
“The WOW team is extremely excited with this growth opportunity,” WOW CEO Colleen Abdoulah said in a prepared statement. “SIGECOM’s focus on delivering exceptional bundled value and the highest-quality customer service is a strong strategic fit with WOW’s operating philosophy. We are committed to continuing to serve customers in southern Indiana with an array of services that meet their needs, at a great value, backed by award-winning customer service.”
New York cable investment banker Waller Capital initiated the transaction and served as financial advisor to SIGECOM in the sale. Credit Suisse First Boston represented WOW.