HOUSTON, July 18, 2017 (GLOBE NEWSWIRE) -- Crown Castle International Corp. (NYSE:CCI) (“Crown Castle”) announced today that it has entered into a definitive agreement to acquire LTS Group Holdings LLC (“Lightower”) from Berkshire Partners, Pamlico Capital and other investors for approximately $7.1 billion in cash (subject to certain limited adjustments) (“Transaction”), representing approximately 13.5x expected Adjusted EBITDA contribution during Crown Castle’s first full year of ownership. Lightower owns or has rights to approximately 32,000 route miles of fiber located primarily in top metro markets in the Northeast, including Boston, New York and Philadelphia. Following completion of the Transaction, Crown Castle will own or have rights to approximately 60,000 route miles of fiber.
“We are excited about the addition of Lightower given its attractive fiber footprint and the value we believe it will create for our shareholders,” stated Jay Brown, Crown Castle’s Chief Executive Officer. “Lightower’s dense fiber footprint is well-located in top metro markets in the Northeast and is well-positioned to facilitate small cell deployments by our customers. Following the Transaction, we will have approximately 60,000 route miles of fiber with a presence in all of the top 10 and 23 of the top 25 metro markets. We expect the Transaction to be immediately accretive to our AFFO per share and long-term dividend growth and, as a result, anticipate increasing our annual common stock dividend rate, subject to approval by our board of directors, between $0.15 and $0.20 per share following the closing of the Transaction.”
Key Strategic and Financial Benefits
Transaction Details
Crown Castle intends to finance the Transaction consistent with maintaining its current investment grade credit metrics, utilizing cash on hand and equity and debt financing, including borrowings under its revolving credit facility. Further, in connection with the Transaction, Crown Castle has received financing commitments from Morgan Stanley Senior Funding, Inc. and BofA Merrill Lynch totaling approximately $7.1 billion for new unsecured bridge facility.
Morgan Stanley & Co. LLC acted as financial advisor to Crown Castle, and Cravath, Swaine & Moore LLP provided legal counsel to Crown Castle. Evercore and Citigroup Inc. acted as the financial advisors to Lightower, while Ropes and Gray LLP provided legal counsel to Lightower.
Crown Castle anticipates closing the Transaction by the end of 2017. The Transaction is subject to federal and state regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and review by the U.S. Federal Communications Commission, and other customary closing conditions.
Conference Call Details
Crown Castle has scheduled a conference call for Wednesday, July 19, 2017, at 7:30 a.m. eastern time to discuss the Transaction and its second quarter 2017 earnings results. The conference call may be accessed by dialing 800-967-7185 and asking for the Crown Castle call (access code 7235918) at least 30 minutes prior to the start time. The conference call may also be accessed live over the Internet at http://investor.crowncastle.com. Any supplemental materials for the call will be posted on the Crown Castle website at http://investor.crowncastle.com.
A telephonic replay of the conference call will be available from 10:30 a.m. eastern time on Wednesday, July 19, 2017, through 10:30 a.m. eastern time on Tuesday, October 17, 2017, and may be accessed by dialing 888-203-1112 and using access code 7235918. An audio archive will also be available on the company’s website at http://investor.crowncastle.com shortly after the call and will be accessible for approximately 90 days.
ABOUT CROWN CASTLE
Crown Castle provides wireless carriers with the infrastructure they need to keep people connected and businesses running. With approximately 40,000 towers and 60,000 route miles of fiber supporting small cells following the completion of the Lightower acquisition, Crown Castle is the nation's largest provider of shared wireless infrastructure with a significant presence in the top 100 U.S. markets. For more information on Crown Castle, please visit www.crowncastle.com.
Cautionary Language Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on Crown Castle management’s expectations. Such statements include plans, projections and estimates regarding (1) the Transaction, including timing and financing thereof, (2) potential benefits of the Transaction, including (a) improvement to or enhancement of Crown Castle’s asset portfolio, growth, industry position and capabilities and (b) contribution to or impact on Crown Castle’s financial or operating results, including site rental revenues, net income (including on a per share basis), Adjusted EBITDA, growth rates and AFFO (including on a per share basis), (3) demand for wireless infrastructure, including towers and fiber, (4) Crown Castle’s dividends, including any increase thereof, (5) Crown Castle’s ability to generate long-term value for its shareholders and meet the needs of its customers and demand for data and connectivity, (6) Crown Castle’s and Lightower’s respective fiber assets and footprint, including the value thereof (7) the value and term of Lightower’s contracts, (8) demand for mobile data and connectivity, and the growth thereof, (9) demand for, potential growth of and opportunities which may be derived from the Lightower assets, and (10) qualification of Lightower’s assets and revenues under rules governing REITs. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including prevailing market conditions and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors that could affect Crown Castle and its results is included in Crown Castle’s filings with the Securities and Exchange Commission. The term “including,” and any variation thereof, means “including, without limitation.”
Non-GAAP Financial Measures
This press release includes presentations of Adjusted EBITDA, Adjusted Funds from Operations ("AFFO") and Funds from Operations ("FFO"), which are non-GAAP financial measures. These non-GAAP financial measures are not intended as alternative measures of operating results or cash flow from operations (as determined in accordance with Generally Accepted Accounting Principles ("GAAP")).
Our measures of Adjusted EBITDA, AFFO and FFO may not be comparable to similarly titled measures of other companies, including other companies in the wireless infrastructure sector or other REITs. Our definition of FFO is consistent with guidelines from the National Association of Real Estate Investment Trusts with the exception of the impact of income taxes in periods prior to our REIT conversion.
Adjusted EBITDA, AFFO and FFO are presented as additional information because management believes these measures are useful indicators of the financial performance of our business. Among other things, management believes that:
We define our non-GAAP financial measures as follows:
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus restructuring charges (credits), asset write-down charges, acquisition and integration costs, depreciation, amortization and accretion, amortization of prepaid lease purchase price adjustments, interest expense and amortization of deferred financing costs, gains (losses) on retirement of long-term obligations, net gain (loss) on interest rate swaps, gains (losses) on foreign currency swaps, impairment of available-for-sale securities, interest income, other income (expense), benefit (provision) for income taxes, cumulative effect of a change in accounting principle, income (loss) from discontinued operations and stock-based compensation expense.
Adjusted Funds from Operations. We define Adjusted Funds from Operations as FFO before straight-lined revenue, straight-lined expense, stock-based compensation expense, non-cash portion of tax provision, non-real estate related depreciation, amortization and accretion, amortization of non-cash interest expense, other (income) expense, gain (loss) on retirement of long-term obligations, net gain (loss) on interest rate swaps, gains (losses) on foreign currency swaps, acquisition and integration costs, and adjustments for noncontrolling interests, and less capital improvement capital expenditures and corporate capital expenditures.
Funds from Operations. We define Funds from Operations as net income plus real estate related depreciation, amortization and accretion and asset write-down charges, less noncontrolling interest and cash paid for preferred stock dividends, and is a measure of funds from operations attributable to CCIC common stockholders.
Reconciliation of Expected Contribution from Lightower Acquisition to Full Year 2018 for Adjusted EBITDA: | |||||
Full Year 2018 | |||||
(in millions) | Expected Contribution | ||||
Net income (loss) | $163 | to | $213 | ||
Adjustments to increase (decrease) net income (loss): | |||||
Asset write-down charges | $0 | to | $0 | ||
Acquisition and integration costs | $20 | to | $40 | ||
Depreciation, amortization and accretion | $250 | to | $300 | ||
Amortization of prepaid lease purchase price adjustments | $0 | to | $0 | ||
Interest expense and amortization of deferred financing costs(a) | $0 | to | $0 | ||
Gains (losses) on retirement of long-term obligations | $0 | to | $0 | ||
Interest income | $0 | to | $0 | ||
Other income (expense) | $0 | to | $0 | ||
Benefit (provision) for income taxes | $15 | to | $20 | ||
Stock-based compensation expense | $5 | to | $15 | ||
Adjusted EBITDA(b) | $510 | to | $530 | ||
(a) Excludes the impact of expected financing relating to the Lightower acquisition. Assumes the Lightower acquisition closes on December 31, 2017. | |||||
(b) See "Non-GAAP Financial Measures " herein for a discussion of our definition of Adjusted EBITDA. |
Reconciliation of Expected Contribution from Lightower Acquisition to Full Year 2018 for FFO and AFFO: | |||||
Full Year 2018 | |||||
(in millions) | Expected Contribution | ||||
Net income (loss) | $163 | to | $213 | ||
Real estate related depreciation, amortization and accretion | $209 | to | $259 | ||
Asset write-down charges | $0 | to | $0 | ||
FFO(a) | $396 | to | $446 | ||
FFO (from above) | $396 | to | $446 | ||
Adjustments to increase (decrease) FFO: | |||||
Straight-lined revenue | $(2) | to | $0 | ||
Straight-lined expense | $0 | to | $0 | ||
Stock-based compensation expense | $5 | to | $15 | ||
Non-cash portion of tax provision | $0 | to | $0 | ||
Non-real estate related depreciation, amortization and accretion | $16 | to | $66 | ||
Amortization of non-cash interest expense(b) | $0 | to | $0 | ||
Other (income) expense | $0 | to | $0 | ||
Gains (losses) on retirement of long-term obligations | $0 | to | $0 | ||
Acquisition and integration costs | $20 | to | $40 | ||
Capital improvement capital expenditures | $(29) | to | $(24) | ||
Corporate capital expenditures | $0 | to | $0 | ||
AFFO(a) | $465 | to | $485 | ||
(a) See "Non-GAAP Financial Measures " herein for a discussion for our definitions of FFO and AFFO. | |||||
(b) Excludes the impact of expected financing relating to the Lightower acquisition. Assumes the Lightower acquisition closes on December 31, 2017. |
Contacts: | Dan Schlanger, CFO | |
Son Nguyen, VP & Treasurer | ||
Crown Castle International Corp. | ||
713-570-3050 |