A little more than two years after filing
for bankruptcy protection, Broadstripe, the former
Millennium Digital Media, has agreed to sell its cable assets
with more than 100,000 customers to WideOpenWest and
Wave Broadband.
DH Capital is providing
advisory services to
Broadstripe on the transaction.
According to documents
filed with the Delaware
Bankruptcy Court,
Wave has agreed to pay
$32 million for Broadst
ripe systems with
roughly 60,000 subscribers
and 103,000 homes
passed in Washington
and Oregon. WOW has
agreed to pony up about
$55 million for Broadstripe
assets in Michigan
with about 48,000 customers and 92,000 homes passed.
Broadstripe’s Anne Arundel County, Md., property —
which competes with Comcast, Verizon Communications’
FiOS TV and AT&T’s U-Verse TV — is in the process of being
acquired by a newly formed entity, Anne Arundel Broadband,
for about $8 million. Anne Arundel Broadband is headed by a
group of industry veterans, including Broadstripe executive
vice president of regional operations John Bjorn, according to
court documents. The deals are subject to approval from the
court and could take about four months to close.
All together, the deals will give Broadstripe about $95
million, or a little more than half what it owes to secured
creditors. According to court documents, the majority of
those creditors have given their conditional consent to the
deal, pending better offers.
If they are consummated, the transactions mark the
end of a two-year odyssey for Broadstripe, which filed for
bankruptcy protection in January 2009.
For Wave Broadband, which has about 300,000 customers
in Washington, Oregon and Northern California, it is
the end of a sometimes contentious five-year relationship
with Broadstripe and its predecessor.
Wave CEO Steve Weed has a long history with Millennium
Digital — he sold Summit Communications to Millennium
in 1999 and ran its Seattle system until 2001, when
he formed Wave.
In 2006, Weed engineered a deal to buy Millennium’s systems
in Washington and Oregon for about $150 million.
That transaction unraveled later that year, when Millennium
attracted a new backer — Highland Capital
Management — that opted
instead to recapitalize.The
new owners hired new management,
including former
Charter Communications
and Cebridge Communications
executive William
Shreffler, changed the company’s
name to Broadstripe
and set off to build through
acquisition.
Although Wave sued in
2006, claiming breach of
contract, Broadstripe cont
inued with its growth
strategy, reaching a deal to
acquire rural Michigan cable
operator James Cable in
2007 for an estimated $125
million.
That, too, was short-lived. Broadstripe never closed the
James Cable deal — prompting another lawsuit — and
Shreffler left the company in 2008. In 2009, Broadstripe
filed for bankruptcy protection.
According to the bankruptcy court documents, Wave
Broadband and James Cable settled their lawsuits with the
company in September 2010.
Wave and WOW are essentially stalking-horse bidders
for the assets, meaning that their bids serve as the base
price for an official auction of the properties that will begin
on Sept. 15. While that could mean that another bidder
could swoop in with a higher offer, because previous
rounds did not attract higher bids, Wave and WOW are expected
to end up with the properties.
“With this acquisition, Wave continues a tradition of expansion
in strategic West Coast markets,” Weed said in a
statement. “Wave’s successful growth stems from our sincere
commitment to providing superior products and exceptional
service to our customers. And we look forward
to serving these communities.”
For WOW, the deal comes on the heels of its participation
in the highly publicized auction for Insight Communications,
which agreed to sell its systems to Time Warner Cable for $3
billion earlier this month.
WOW, owned by Avista Capital
Partners, serves about
1.5 million households in
Illinois, Indiana, Michigan
and Ohio.
“We are very excited about
this acquisition and the opportunity
to invest and further
grow our business.
WOW’s operating philosophy
is to deliver an employee
and customer experience
that lives up to our name and
we look forward to welcoming
Broadstripe’s employees
and customers into the
WOW family,” WOW president
Steven Cochran said in
a statement.
DEAL POINTS
Wave Broadband:
$32 million for 60,000 subscribers and 103,000
homes passed in Washington and Oregon.
WideOpenWest:
$55 million for 48,000 subscribers and 92,000
homes passed in Michigan.
Anne Arundel Broadband:
$8 million for Anne Arundel County, Md., system,
which competes with Comcast, Verizon and AT&T.
SOURCE:
Bankruptcy court documents; published reports
