Liberty Latin America Ltd. (NASDAQ: LILA and LILAK, OTC Link: LILAB) has announced it has entered into a definitive agreement to acquire AT&T Inc.´s (AT&T) wireless and wireline operations in Puerto Rico and the US Virgin Islands (the “Acquisition Assets”), the company said.
In the all-cash transaction, the Acquisition Assets are valued at an enterprise value of USD 1.95 billion on a cash- and debt-free basis.
The Acquisition Assets provide consumer mobile and B2B services in Puerto Rico and the US Virgin Islands, excluding DIRECTV customers. In Puerto Rico, which represents approximately 90% of the revenue of the assets to be acquired, AT&T´s business is the provider of mobile services with the fastest network and a strong spectrum position, in addition to a well invested fiber backhaul network.
Under the terms of the agreement, AT&T will support LLA for a period up to 36 months following the acquisition enabling the efficient transition of services. Following the acquisition, customers in the Acquisition Assets will continue to benefit from free roaming services between Puerto Rico, the US Virgin Islands and the mainland United States, Mexico and Canada. LLA will continue providing enterprise services for AT&T´s retained global business customers and support AT&T´s FirstNet program for first responders in Puerto Rico and the US Virgin Islands.
Liberty Latin America intends to finance the USD 1.95 billion acquisition (plus fees and expenses) through a combination of USD 2.2 billion in borrowings on the combined Acquisition Assets and Liberty Puerto Rico (including refinancing USD 922.5 million in existing term loans at Liberty Puerto Rico) and the remaining approximately USD 750 million from Liberty Latin America´s committed liquidity of USD 2.0 billion at June 30, 2019. As a result of the contemplated financing, we anticipate the pro forma net leverage ratio3 of our combined Puerto Rico and US Virgin Islands assets will be ~4.25x (before synergies), which results in a decline in net leverage from 4.5x as reported at June 30, 2019 for Liberty Puerto Rico.
Liontree LLC and Credit Suisse are acting as financial advisors to Liberty Latin America on the transaction.
Liberty Latin America is a communications company operating in over 20 countries across Latin America and the Caribbean under the consumer brands VTR, Flow, Liberty, Más Móvil, BTC, UTS and Cabletica. In addition, Liberty Latin America operates a sub-sea and terrestrial fiber optic cable network that connects over 40 markets in the region.