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Oak Hill Capital, GI Partners Team with Management to Purchase WaveDivision Holdings

Tied to CEO Steve Weed and other management executives, there will be a new wave of owners at WaveDivision Holdings.
Oak Hill Capital Partners and GI Partners, in conjunction with Weed and his management team, have entered into a definitive agreement to acquire WaveDivision, whose operating units trade under the Wave Broadband and Astound names, from current ownership, led by Sandler Management Capital.

It was unclear at presstime, how the company, which earlier this year began exploring the deal waters, would be structured under its new ownership. The purchase agreement, terms of which were not disclosed, is expected to close in the fourth quarter.

Established by Weed and Sandler Capital Management in 2003, WaveDivision currently counts some 385,000 revenue generating units, supplying video, high-speed data and voice services to residential and commercial customers in suburban areas outside Seattle, Portland, Ore., and San Francisco and Sacramento, Calif. The company says it passes 586,000 homes in the aforementioned markets.
Sandler Capital was an early backer of Wave and its founder and CEO Weed, the former Millennium Digital Media executive, and owns about 90% of its equity. In addition to organic growth, Weed forged Wave through a mixture of deals, buying Northland Cable and Avenue Cable, as well as systems from Charter Communications and Knology over a span about four years. In August 2011, Wave purchased systems with about 60,000 subscribers and 103,000 homes passed in Washington and Oregon from Broadstripe, for some $32 million.
Wave, which is a strong operator producing about $100 million in cash flow, previously tested the deal waters in 2010, when it hired Waller Capital Partners and RBC Capital Markets to seek a potential partner. But as the capital markets tightened, its systems were pulled off the block.
Now, the company is pushing forward with new partners.
"We are extremely pleased to be partnering with Oak Hill Capital and GI. Both firms bring value-added expertise and impressive track records of successful investments in our industry," said Weed in announcing the new ownership structure. "Their insight and support will be invaluable as we continue to provide our communities with the highest levels of product quality, speed and customer care available. On behalf of Wave, I would also like to thank the entire team at Sandler Capital for a decade of successful partnership."
Jonathan Friesel, a partner of Oak Hill Capital, noted: "Steve Weed and the Wave management team have built an outstanding organization, with highly advanced networks, strong operations, a robust suite of products and exceptional customer service. We are looking forward to working with them as they continue to set the standard in the markets they serve."
Added GI director Gregory VandenBosch: "We are delighted about this new partnership and look forward to working with management and Oak Hill Capital to further enhance the Wave platform."
RBC Capital Markets and Waller Capital Partners are serving as financial advisors to Wave on the transaction, while Deutsche Bank and Wells Fargo are serving as financial advisors to Oak Hill Capital. Dow Lohnes PLLC is legal counsel to Wave. Paul, Weiss, Rifkind, Wharton & Garrison LLP is legal counsel to Oak Hill Capital, and Kirkland & Ellis LLP is legal counsel to GI Partners.