LONDON (Alliance News) - Cable & Wireless Communications PLC Thursday announced a placing of new shares representing up to 9.99% of its existing share capital to help fund the acquisition of Columbus International Inc for USD1.85 billion, while posting a rise in pre-tax profit for the half year to end-September.
Columbus is a privately-owned telecommunications and technology services company based in Barbados.
The company will fund the acquisition via the payment of USD707.5 million in cash and issue of 1.56 billion new shares in the company to some Columbus shareholders. The placing of 252.8 million new shares will part fund the cash element, with new debt financing being used for the remainder.
Deutsche Bank AG is acting as lead manager and bookrunner for the placing. Shareholder Orbis Investment Management Ltd, which has a 16.18% holding in the company, has committed to subscribe for 40.9 million shares in the placing, and potentially more. Invesco Asset Management Ltd, which has a 5.05% holding, has committed to subscribe for a maximum of 25.3 million shares.
Cable & Wireless said that the acquisition will be earnings neutral in the first full year post-completion, and materially earnings enhancing in subsequent years. It said it expects the acquisition to create "greater regional presence, scale and scope with assets and capabilities that the board believes will reinforce and accelerate the realisation across each of [its] four areas of strategic focus."
"This is a transaction that transforms CWC, providing a step-change in growth and returns. Columbus offers complementary TV, Broadband and B2B capabilities in complementary markets. Together, we will create the best-in-class quad-play offering in the region, delivered on a superior mobile, fibre and subsea network," said Chief Executive Philip Bentley in a statement.
The company also posted its half year results, posted a rise in pretax profit to USD132 million from USD17 million a year before, as revenue rose slightly to USD848 million from USD841 million. Cable & Wireless said it had lower finance expenses, and in the previous year had posted exceptional costs of USD55 million. The company saw revenue growth in all of its segments except fixed voice.
It proposed an interim dividend of USD1.33 cents per share, maintained from the previous year, and said it expects to pay USD2.67 cents as a final dividend.
Cable & Wireless said it expects its second half to be stronger than the first, and in line with expectations. The company said it continued to focus on cost efficiencies, and is on track for its target of USD100 million in run-rate savings by end-March 2014. During the half year the company cut operating costs by 2%, by increasing efficiency, reducing headcount, exiting non-core property assets, although this was partly offset by higher advertising spend.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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