Cable & Wireless Communications (CWC) has revealed that it has reached an agreement with Bahrain Telecommunications Company (Batelco) regarding the sale of the majority of its businesses within its ‘Monaco & Islands’ division. In a press release confirming the development, CWC has confirmed that it will sell off its entire shareholdings in the Maldives, the Channel Islands, the Isle of Man, the Seychelles, South Atlantic and Diego Garcia, while it will also divest a 25% stake in Compagnie Monegasque de Communication SAM (CMC), the company which holds CWC’s 55% interest in Monaco Telecom. Further, CWC and Batelco have entered into certain put and call option arrangements over the former’s remaining 75% interest in CMC; these options will enable CWC to sell the controlling stake in Monaco Telecom to Batelco for an additional consideration of USD345 million. These options, which can be exercised within twelve months of completion of the initial deal, are subject to obtaining necessary regulatory and other consents, including the approval of the Principality of Monaco. Should the consents not be forthcoming, CWC and Batelco have agreed a further option arrangement which enables the return of the 25% shareholding in CMC to CWC for a consideration of USD100 million.
Batelco will pay USD680 million in cash for the shares, upon completion of the transaction, a figure which CWC has noted represents a multiple of 6.3 times the proportionate EBITDA for the year to end-March 2012 of the businesses being sold. The deal is subject to approval from CWC shareholders, while it will also need to ensure any regulatory conditions are satisfied, both of which are expected to have been achieved by the end of March 2013. Once completed, Batelco will take control of each of the majority-owned businesses, while CWC will continue to operate the Monaco Telecom business in partnership with the Principality of Monaco as co-shareholder.
The stake sale, CWC noted, ‘accelerates the delivery of CWC’s strategy to reshape its business, reduce its geographic spread, and focus on the Central American and Caribbean region’, while it added that it will also increase the company’s financial flexibility. Following the divestment, CWC expects its net debt position to be reduced from USD1.59 billion as at 30 September 2012 to approximately USD937 million on a pro forma basis.