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Cequel Communications
With a last minute switch in a $3.2 billion financing structure, Paul Hastings helps Cequel Communications become the 8th largest cable provider in the US.
The Background
Cequel Communications (Cequel), a St. Louis-based company with 450,000 subscribers, wanted to grow. The proposed sale of cable television systems in several states from cable provider Cox Communications presented just the kind of opportunity Cequel was looking for -by adding systems in West Texas, North Carolina, Louisiana, Arkansas and California, Cequel could potentially triple its subscriber-base and gain ground in competitive markets. With a deal this large, complex and worth billions, Cequel once again turned to Paul Hastings. It was a choice based on measurable results. Paul Hastings' twenty-five years of experience representing Cequel's principals in a variety of telecom endeavors brought an unmatchable level of confidence to a transaction that represented such high stakes for the client.
The Team
Faced with massive documentation relating to a series of complicated inter-dependent transactions, Paul Hastings assembled custom legal teams that delivered focused, coordinated counsel on the equity, debt and high yield aspects of the acquisition, as well as providing integrated guidance on FCC, IP and securities matters. With teams in Atlanta, Washington, DC and New York committed to the acquisition, Paul Hastings promised full-service representation to the client. We also had the capabilities to handle the financing for another acquisition that would be tied to the overall financing structure of the Cox acquisition. Worth $770 million, the Charter Communications deal brought in an additional 325,000 subscribers attached to systems in Kentucky, Ohio, Virginia and West Virginia.
An unexpected challenge came within a week of the initial closing date, when favorable market conditions suggested that Cequel would be better served by a second lien debt facility than the high-yield offering that had been part of the original plan. The changing financing, a rare occurrence this late in the game, demanded extreme flexibility. With the first lien facility oversubscribed, and enough interest in the market to support a second lien facility, the Paul Hastings team (led by PartnersDan Bergstein, Barry Brooks, Leslie PlaskonandJoe Opich ) focused on restructuring the deal that would suit their client best, despite an immovable deadline from the sellers.
The Results
Paul Hastings' proven working relationship with equity investors like Goldman Sachs, Lehman Brothers, Oaktree Capital Management and Merrill Lynch facilitated a smooth transactional process, and, within days of the deadline, the second lien facility was completed, closing a deal worth over $3.2 billion - including a $2.3 billion senior facility, a $280 million term loan and a $675 million second lien facility With the close, Cequel became the eighth largest cable operator in the US, serving more than 1.3 million customers in over 20 states. For Paul Hastings, the Cequel transaction is a classic case study in client service, illustrating the firm's ability to answer both the immediate transactional needs of our clients, as well as their long-term best interests.