Mails Letter to Shareholders Reiterating that
Shareholders Should Vote “FOR” the Value Maximizing Transaction
TODAY
Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the
“Company” or “Consolidated”), filed an investor presentation with
the U.S. Securities and Exchange Commission (“SEC”) on January 10,
2024 in connection with the Company’s upcoming special meeting of
shareholders (the “Special Meeting”) on January 31, 2024. The
presentation is available on the Company’s investor relations
website at https://ir.consolidated.com/.
The Company urges its shareholders to vote “FOR” the proposed
acquisition of the Company by affiliates of Searchlight Capital
Partners, L.P. (“Searchlight”) and British Columbia Investment
Management Corporation (“BCI”) (the “Proposed Transaction”).
Shareholders of record as of December 13, 2023, are entitled to
vote at the Special Meeting.
Highlights of the presentation include:
- Transaction offers a compelling valuation, and shifts
execution, liquidity, and market risk to buyers
- All-cash offer at a 70% premium to Consolidated’s unaffected1
share price is significantly higher than public and take-private
precedent transactions, and exceeds analysts’ price targets,
despite material sector-wide decline.
- Implied 9.6x LTM EBITDA multiple is higher than any Local
Exchange Carrier precedent transaction in at least a decade.
- Eliminates ongoing uncertainty of liquidity, funding and
execution risks, transferring those risks to Searchlight and
BCI.
- Extensive special committee process over six months examined
multiple strategic alternatives and achieved a 17.5% increase in
price to the original offer.
- Standalone plan carries more downside risk than upside
risk
- Consolidated no longer has the liquidity to fund its prior
standalone growth plans and sufficient external financing is not
readily available.
- Liquidity constraints add serious risk to the Company’s
capital-intensive fiber transformation, which is a requirement if
the Company is to remain competitive and deliver growth.
- Time to market is imperative – those who are first to market
with fiber offerings will be best-positioned to take and hold
significant share. Delays to Consolidated’s fiber build due to
liquidity constraints cedes its incumbency advantage, presenting
potential franchise risk.
- Voting down this deal would be disastrous for
shareholders
- Wildcat Capital Management, LLC may dismiss the strategic
urgency of our liquidity constraints but if this deal is not
approved, the market will not be so forgiving. Peers of
Consolidated have traded down, underscoring the market’s concern
about the challenges Consolidated and its peers face.
- Wildcat’s analysis fails to account for both the cost and
dilutive impact of the additional capital needed to execute the
standalone plan and the significant execution risks that fiber
conversion presents.
- Wildcat has an unrealistic demand for $14.00 per share – a 407%
premium over the unaffected stock price.
- No other bidders emerged during the well-publicized process or
post-announcement of the Proposed Transaction, demonstrating that
this is the best deal available.
Consolidated also mailed a letter to its shareholders in
connection with the Special Meeting. The full text of the letter
follows:
January 11, 2024
Dear Fellow Shareholders,
The special committee of independent
directors (the “Special Committee”) of the Board of Directors of
Consolidated Communications Holdings, Inc. (the “Board”) is here to
answer your questions about the value-maximizing acquisition of the
Company proposed by affiliates of Searchlight Capital Partners,
L.P. (“Searchlight”) and British Columbia Investment Management
Corporation (“BCI”) (the “Proposed Transaction”).
The January 31, 2024 deadline to vote on the
Proposed Transaction is fast approaching. You only have one
opportunity to protect the value of your investment and realize
the benefits.
Vote Your Shares “FOR” Today –
Not Voting Is the Same as Voting Against the
Proposed Transaction
Why should I vote FOR the deal?
Casting your vote is the best way for
you to secure this compelling cash premium.
Our standalone plan carries
significant downside risk due to our constrained liquidity
position and limited access to capital. We are simply unable to
fund future fiber builds at the pace necessary to remain
competitive and to continue to grow.
The Proposed Transaction eliminates the
real risk that shareholders face if Consolidated were to remain
public, and transfers all liquidity, financing and execution risks
to Searchlight and BCI.
Is this my best option?
We believe so, yes.
The Special Committee completed an
exhaustive evaluation of all opportunities to maximize value for
shareholders, meeting more than 35 times over a six-month period.
The process was public and highly visible from the moment
Searchlight and BCI submitted their initial non-binding proposal to
the Board. No parties expressed interest in
bidding despite this long and public process.
The Special Committee’s robust evaluation
underscores that the Proposed Transaction is the most compelling
path forward for Consolidated and its shareholders.
The $4.70 per share all-cash offer is:
- A 70% premium to our unaffected share price1
- Significantly higher than certain recent public and take
private precedent transactions
- Significantly higher than analysts’ price targets prior to the
unaffected date1
What happens if I don’t vote?
If we do not get enough votes in favor to
approve the transaction, it will fail and Consolidated’s share
price is at risk of dropping significantly below the
pre-announcement price.
Maximize the value of your investment
and vote “FOR” the Proposed Transaction today.
Your vote is extremely important,
regardless of how many shares you own. Every vote counts and is
critical to the future of the Company. Not voting is the same as
voting against the transaction.
How do I vote?
Consolidated shareholders have three
quick and easy ways to vote “FOR” the Proposed Transaction up until
11:59 p.m. ET the day before the cut-off date or meeting
date:
- Vote Online: Before the meeting, go to proxyvote.com or
scan the QR code on your card. Have your proxy card in hand and
follow the instructions.
- Vote By Mail: Mark, sign and date the proxy card and
return it in the postage-paid envelope provided.
- Vote By Phone: Dial 1-800-690-6903 on any touch-tone
telephone. Have your proxy card in hand and follow the
instructions.
Don’t delay. We recommend that you
vote promptly, even if you plan to attend the special meeting of
shareholders.
As a Consolidated shareholder, your choice is
clear: vote for significant, compelling and certain value. Vote
“FOR” the Proposed Transaction today.
We thank you for your continued support.
Sincerely,
The Special Committee of the Board of
Directors of Consolidated Communications Holdings, Inc.
Shareholders with questions or who require assistance voting
their shares should contact Consolidated’s proxy solicitor, Morrow
Sodali. Shareholders may call toll-free: (800) 662-5200 or +1 (203)
658-9400 (international) or email CNSL@info.morrowsodali.com.
Advisors
Rothschild & Co is acting as financial advisor to the
special committee and Cravath, Swaine & Moore LLP is acting as
its legal counsel. Latham & Watkins LLP is providing legal
counsel to Consolidated Communications.
About Consolidated Communications
Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) is
dedicated to moving people, businesses and communities forward by
delivering the most reliable fiber communications solutions.
Consumers, businesses and wireless and wireline carriers depend on
Consolidated for a wide range of high-speed internet, data, phone,
security, cloud and wholesale carrier solutions. With a network
spanning nearly 60,000 fiber route miles, Consolidated is a top 10
U.S. fiber provider, turning technology into solutions that are
backed by exceptional customer support.
Forward-Looking
Statements
Certain statements in this communication are forward-looking
statements and are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect, among other things, the
Company’s current expectations, plans, strategies and anticipated
financial results.
There are a number of risks, uncertainties and conditions that
may cause the Company’s actual results to differ materially from
those expressed or implied by these forward-looking statements,
including: (i) the risk that the Proposed Transaction may not be
completed in a timely manner or at all; (ii) the failure to
receive, on a timely basis or otherwise, the required approvals of
the Proposed Transaction by the Company’s stockholders; (iii) the
possibility that any or all of the various conditions to the
consummation of the Proposed Transaction may not be satisfied or
waived, including the failure to receive any required regulatory
approvals from any applicable governmental entities (or any
conditions, limitations or restrictions placed on such approvals);
(iv) the possibility that competing offers or acquisition proposals
for the Company will be made; (v) the occurrence of any event,
change or other circumstance that could give rise to the
termination of the definitive transaction agreement relating to the
Proposed Transaction, including in circumstances which would
require the Company to pay a termination fee; (vi) the effect of
the announcement or pendency of the Proposed Transaction on the
Company’s ability to attract, motivate or retain key executives and
employees, its ability to maintain relationships with its
customers, suppliers and other business counterparties, or its
operating results and business generally; (vii) risks related to
the Proposed Transaction diverting management’s attention from the
Company’s ongoing business operations; (viii) the amount of costs,
fees and expenses related to the Proposed Transaction; (ix) the
risk that the Company’s stock price may decline significantly if
the Proposed Transaction is not consummated; (x) the risk of
shareholder litigation in connection with the Proposed Transaction,
including resulting expense or delay; and (xi) (A) the risk factors
described in Part I, Item 1A of Risk Factors in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2022 and
(B) the other risk factors identified from time to time in the
Company’s other filings with the SEC. Filings with the SEC are
available on the SEC’s website at http://www.sec.gov.
Many of these circumstances are beyond the Company’s ability to
control or predict. These forward-looking statements necessarily
involve assumptions on the Company's part. These forward-looking
statements generally are identified by the words “believe,”
“expect,” “anticipate,” “intend,” “plan,” “should,” “may,” “will,”
“would” or similar expressions. All forward-looking statements
attributable to the Company or persons acting on the Company’s
behalf are expressly qualified in their entirety by the cautionary
statements that appear throughout this communication. Furthermore,
undue reliance should not be placed on forward-looking statements,
which are based on the information currently available to the
Company and speak only as of the date they are made. The Company
disclaims any intention or obligation to update or revise publicly
any forward-looking statements.
Additional Information and Where to Find
It
This communication may be deemed to be solicitation material in
respect of the Proposed Transaction. The Special Meeting will be
held on January 31, 2024 at 9:00 A.M. Central Time, at which
meeting the stockholders of the Company will be asked to consider
and vote on a proposal to adopt the merger agreement and approve
the Proposed Transaction. In connection with the Proposed
Transaction, the Company filed relevant materials with the SEC,
including the Proxy Statement. The Company commenced mailing the
Proxy Statement and a proxy card to each stockholder of the Company
entitled to vote at the Special Meeting on December 18, 2023. In
addition, the Company and certain affiliates of the Company jointly
filed an amended transaction statement on Schedule 13e-3 (the
“Schedule 13e-3”). INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE
URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING
THE PROXY STATEMENT AND THE SCHEDULE 13E-3, BECAUSE THEY CONTAIN
IMPORTANT INFORMATION ABOUT THE COMPANY, SEARCHLIGHT AND BCI AND
THE PROPOSED TRANSACTION. Investors and stockholders of the Company
are able to obtain these documents free of charge from the SEC’s
website at www.sec.gov, or free of charge from the Company by
directing a request to the Company at 2116 South 17th Street,
Mattoon, IL 61938, Attention: Investor Relations or at tel: +1
(844) 909-2675.
Notes
- Unaffected stock price as of April 12, 2023, the last trading
day prior to public announcement of the non-binding proposal.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240110179493/en/
Philip Kranz, Investor Relations +1 217-238-8480
Philip.kranz@consolidated.com
Jennifer Spaude, Media Relations +1 507-386-3765
Jennifer.spaude@consolidated.com
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