Mediacom Communications Corp. priced its initial public
offering at $19 per share last week -- the high end of its expected $16 to $19 range --
raising $380 million in the cable industry's latest entry into the public markets.
Mediacom sold 20 million class-A common shares,
representing about 22 percent of the company's outstanding class-A and class-B
shares. The company also granted its underwriters the option of purchasing an additional 3
million shares at the offering price, which would raise another $57 million.
The IPO follows a busy 1999 for MSOs tapping the stock
markets for the first time. Insight Communications Co. Inc., Charter Communications Inc.
and Classic Cable Inc. all went public in 1999.
Chairman Rocco Commisso owns about 46 percent of
Mediacom's 61 million class-A shares and 100 percent of its 29 million class-B
supervoting shares.
Underwriters for the offering included Credit Suisse First
Boston; Salomon Smith Barney; Donaldson, Lufkin & Jenrette Inc.; Goldman, Sachs &
Co.; Merrill Lynch & Co.; Chase Securities; CIBC World Markets; and First Union
Securities Inc.
In January, the company amended its price range from $15
per share to $20.
Mediacom said it would use the proceeds of the offering
primarily to retire debt and for acquisitions.
Mediacom shares opened at $20 each, and they went as high
as $21 in morning trading last Friday. The stock was trading at $19.75 around midday.
Warburg Dillon Read LLC analyst Aryeh Bourkoff said
Mediacom's plan to satisfy debt with the IPO proceeds made it an attractive company.
At $19 per share, Mediacom would have a market
capitalization of $2.53 billion, including about $817 million in pro forma debt. That
works out to about 18.6 times annualized cash flow of $135.9 million, roughly in line with
current cable valuations.
"The market dictates a premium for scale, and Mediacom
represents one of the last independent cable operators with scale," Bourkoff said.
The company, formerly known as Mediacom LLC, has about
750,000 subscribers, mainly in rural and secondary markets across the country. It plans to
spend about $400 million during the next three years to upgrade about 90 percent of its
systems to at least 550-megahertz two-way capacity.
