Copyright 2005 Toronto Star Newspapers, Ltd.
The Toronto Star
December 9, 2005 Friday
David Paddon, Canadian Press
From LexisNexis

Cogeco Cable Inc. has been actively looking in Europe for acquisitions, but so far, it hasn't found the right deal, CEO Louis Audet said yesterday.

"The growth opportunities, the acquisition opportunities, in Canada are now very limited ... and this company has grown through acquisitions," Audet told reporters ahead of the Montreal-based company's annual meeting.

Now the company is in good enough financial shape to look for appropriate acquisitions and "Europe has come up as an area where this is entirely possible," Audet said.

"In fact, Europe today looks a lot like Canada circa 1995 - a number of non-integrated, medium-sized companies that are available for sale as the financial institutions who buy them up resell them."

Cogeco grew to become Canada's fourth-largest cable company primarily through 35 acquisitions, mostly from 1997 to 2001.

But, then the company ran into increased competition from satellite TV, a string of financial losses and a nervous capital market.

However, Cogeco has now had three years of generating free cash flow - meaning its operations are producing more cash than what's required to service its debt and the company is prepared to resume growth through acquisitions.

Audet, whose family founded Cogeco, said the company has looked at European acquisitions with 200,000 to 350,000 customers and has bid on "a few" but wasn't willing to go above what it considered a prudent price.

"We have a very big stake in this company. And we don't want to destroy it," Audet said.
"So we're being very careful about how we approach it in terms of size, in terms of indebtedness, in terms of operating risk," he said.

"We're proceeding with great discipline and care."

In Canada, where Cogeco's territory is generally outside large cities but stretches from Quebec's Gaspe Peninsula to the tip of southwestern Ontario, Audet expects growth from its new digital phone business and video-on-demand.

Cogeco Cable shares closed yesterday at $22.01, down 49 cents, on the Toronto Stock Exchange. That's the lowest the stock has been in 52 weeks.