ATN takes controlling stake in KeyTech Bermuda; plans to combine with CellOne

7 Oct 2015

In its second major acquisition announcement this month, Massachusetts-based Atlantic Tele-Network (ATN) has announced the signing of an agreement to take a controlling interest in Bermuda-based KeyTech, ahead of the proposed business combination of KeyTech – which offers voice, broadband, and cable TV services under the brand name Logic in Bermuda and the Cayman Islands – with its Bermuda Digital Communications (BDC) operation, trading as CellOne. The tie-up will create a full service provider of mobile, fixed and international telecommunication services in Bermuda. KeyTech and ATN between them hold approximately 85% of CellOne, with the remaining 15% split between minority shareholders. Under the proposed deal, ATN will contribute its current ownership interest of approximately 43% in CellOne and approximately USD42 million in cash in exchange for a 51% stake in KeyTech. A statement from the US-based holding groups confirms that following the contribution: ‘CellOne will be merged with and into a company within the KeyTech group and the approximate 15% interest in CellOne held, in the aggregate, by the minority shareholders will be converted into the right to receive, in the aggregate, approximately 8.9% of the common shares in KeyTech. A portion of the cash proceeds that KeyTech will receive upon closing will be used to fund a one-time special dividend to KeyTech’s existing shareholders and to retire KeyTech’s subordinated debt.’

The enlarged business hopes to be able to offer a full suite of telecom and video services that will provide a superior customer experience to residential and commercial subscribers. Further, ATN says that the proposed transaction will serve as an entry point for ATN to the growing Cayman Islands market, where it will be offering a similar array of services.

The proposed transaction is subject to customary closing terms and conditions, including, among others: ‘the affirmative vote by KeyTech’s shareholders, the receipt of approval from the Bermuda Regulatory Authority, the Federal Communications Commission, and the Information and Communications Technology Authority of the Cayman Islands and the consent of the Bermuda Stock Exchange to certain transaction matters’.

ATN currently expects to complete the proposed transaction in the first quarter of 2016. KeyTech will continue to be listed on the Bermuda Stock Exchange.

As reported by TeleGeography’s CommsUpdate, earlier this month ATN entered into an agreement to acquire Caribbean Assets Holdings, the holding company for the Innovative group, which provides cable TV, broadband and wireline services primarily in the US Virgin Islands (USVI). The business has been purchased from the National Rural Utilities Cooperative Finance Corporation (CFC) for approximately USD145 million, subject to certain purchase price adjustments. USD85 million is payable in cash and there is an option to finance the remaining USD60 million of the purchase price with a loan from the Rural Telephone Finance Cooperative, an affiliate of CFC. As part of the transaction, ATN is also acquiring Innovative’s smaller cable TV operations in the British Virgin Islands (BVI) and Sint Maarten.

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