Almost one year after first reaching a deal with the former AT&T
Broadband, Bresnan Communications has struck an amended agreement with Comcast
Corp. regarding systems in Montana, Colorado, Wyoming and Utah with 317,000
subscribers.
According to the deal announced Tuesday, Bresnan will pay Comcast (which
acquired AT&T Broadband in November) $525 million in cash and an undisclosed
amount of preferred and common equity interests in Bresnan.
UBS Warburg LLC cable debt and equity analyst Aryeh Bourkoff estimated that
the noncash portion of the deal is valued at about $150 million, making the
total deal worth about $675 million.
Bresnan has been negotiating with Comcast for months, but it ran into trouble
when the high-yield market bottomed out. The company had been seeking a
high-yield deal to fund upgrades for the systems, which it estimated to cost
about $300 million over three years.
Bresnan spokeswoman Maureen Huff said the company is in the process of
securing the financing for the upgrades, and it should be in place by March 31,
when the Comcast deal is expected to close.
Sources familiar with the situation had said in the past that Bresnan was
seeking to buy the systems at a lower price, given the decline in cable
valuations since it first struck an agreement with AT&T Broadband.
Those same sources said Comcast was expected to provide some kind of seller
financing to complete the transaction.
That's just what happened: In April, Bresnan had agreed to pay AT&T
Broadband $735 million in cash for the systems, which, at the time, had about
320,000 subscribers.
The new deal works out to about $2,100 per subscriber, or 10 times 2002 cash
flow, compared with the $2,300 per subscriber value of the original deal.
Bresnan's partners in the deal include Providence Equity Partners Inc.,
Quadrangle Group LLC, TD Capital Communications Partners and Bresnan
management.
