Liberty Global And Searchlight To Acquire Choice

Liberty Global plc (“Liberty Global”) LBTYA LBTYB and LBTYK) today announced that, together with investment funds affiliated with Searchlight Capital Partners, L.P. (collectively, “Searchlight”), it has entered into an agreement to acquire 100% of the parent of Puerto Rico Cable Acquisition Company Inc., dba Choice Cable TV (“Choice”), the second largest cable and broadband services provider in Puerto Rico. Choice's operations will be combined with Liberty Cablevision of Puerto Rico LLC (“LCPR”) and the combined business, which will be 60%-owned by Liberty Global and 40%-owned by Searchlight, will be the largest cable operator on the island. At August 31, 2014, Choice's network passed approximately 345,000 homes and served approximately 154,000 revenue generating units (“RGUs”).1 Mike Fries, CEO of Liberty Global, stated, “The Choice transaction will build upon our 2012 acquisition of OneLink and will complete cable consolidation on the island of Puerto Rico. Going forward, our market-leading bundles and commitment to network investment and innovation will meaningfully enhance the products and services available to Choice customers. Upon completion, our network will reach over 80% of Puerto Rican homes, and the combined business will serve more than 700,000 RGUs and generate over $380 million of annual revenue. Additionally, this will be the first new asset in our anticipated tracking stock for our businesses in Latin America and the Caribbean.” Eric Zinterhofer, co-founder of Searchlight, said, “We are excited about the opportunity to bring next-generation video capability and enhanced broadband services to Choice's customers. Furthermore, through the creation of an island-wide cable operator, there are significant opportunities to drive scale benefits and develop incremental residential and commercial business opportunities in Puerto Rico.” This transaction values Choice at an enterprise value, before transaction costs, of approximately $272.5 million. This equates to a multiple of 6.1 times our estimate of Choice's 2015 full-year operating cash flow, as customarily defined by Liberty Global and adjusted for the projected annual impact of synergies following full integration. Liberty Global expects to attribute its 60% interest in the combined company to its new tracking share group, the Liberty Latin America and Caribbean Group, or “LiLAC Group”, once the tracking share proposal is approved by Liberty Global shareholders and completed. The purchase price is expected to be substantially funded through incremental debt borrowings at the combined Puerto Rican business. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close in the first half of 2015. LionTree Advisors acted as financial advisor in the transaction.