Mediacom Communications said it has inked a definitive agreement to buy back 30 percent of its outstanding shares from Shivers Investments.
Shivers Investments will exchange 28,309,674 shares of Mediacom Class A common stock for 100 percent of the shares of stock of a newly-created subsidiary of Mediacom, which will hold cable television systems currently owned by Mediacom serving approximately 25,000 basic subscribers and $110 million of cash . Both Morris Communications and Shivers are controlled by William S. Morris III, a member of Mediacom’s board of directors.
With the buyback, Mediacom's total outstanding stock would be about 66.3 million. The buyback is slated to close during the fourth quarter, subject to regulatory approvals and other closing conditions. Once the deal is closed, Morris and Craig S. Mitchell, Morris Communications senior vice president of finance, will resign from Mediacom's board.
“This exchange agreement represents a unique opportunity to deliver value to our shareholders without compromising the solid financial position of our Company,” said Rocco B. Commisso, chairman and CEO of Mediacom. “At an implied valuation of about $6.50 per share, we are repurchasing 30 percent of our outstanding shares at a meaningful discount to recent trading levels of our stock.
“Moreover, since part of the consideration consists of non-strategic cable systems, we will still have available about $700 million of unused lines of credit immediately after closing and the company’s pro-forma debt leverage is expected to be lower than in the fourth quarter of 2007. Lastly, through this tax-efficient transaction, the company’s sizeable net operating loss carry forward will largely remain intact.”
According to the National Cable & Telecommunications Association, Mediacom is the eighth-largest cable operator in the United States with 1,326,000 basic subscribers.
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