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LONDON (Alliance News) - Telecommunications company KCOM Group PLC Monday agreed to sell its national network infrastructure outside of Hull and East Yorkshire to AIM-listed CityFibre Infrastructure Holdings PLC for GBP90.0 million.
CityFibre will raise GBP80.0 million in a discounted share placing at 50.00 pence per share, and through the drawdown of GBP35.0 million under its debt facilities. Shares in CityFibre last closed at 66.10 pence.
Under the deal CityFibre will acquire networks in 24 towns and cities, and said that the combined footprint helps make it a national alternative to BT Group PLC's BT Openreach in the wholesale fibre infrastructure market.
"We are pleased to announce this transformational acquisition, which we believe will accelerate our growth target by five to seven years, creating a credible alternative to BT Openreach across the UK. Furthermore, we are delighted to have received the support of our existing shareholders to fund this transaction, and we welcome new shareholders to the register," said Chief Executive Officer Greg Mesch in a statement.
KCOM plans to use the proceeds to reduce its net debt, and said that the deal will strengthen its financial position, giving it the ability to invest further and provide shareholders with a clear medium term dividend commitment . Kcom has also made an arrangement with CityFibre for some services to support existing commitments and customer arrangements.
"Today's announcement unlocks considerable value in relation to an under-utilised asset, built more than ten years ago and which is no longer core to our strategy. Over the first half of the financial year, there were encouraging signs that our business transformation is starting to deliver results and the proceeds from this transaction offer us the opportunity to accelerate investment in those plans, without the need for any material increase in our indebtedness," said Kcom Chief Executive Bill Halbert in a statement.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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