CityFibre Infrastructure Acquires KCOM Assets, Raises Funds--Update
December 14 2015 - 2:59AM
Dow Jones News
(Rewrites, adds details.)
By Simon Zekaria
LONDON--Shares in CityFibre Infrastructure Holdings PLC
(CFHL.LN) sank Monday after the fiber-optic infrastructure operator
said it acquired national infrastructure assets of
telecommunications network provider KCOM Group PLC (KCOM.LN) for
GBP90 million ($137 million) in cash.
It also announced an underwritten placing to raise GBP80 million
at 50 pence per share to raise funds.
The national infrastructure being acquired by CityFibre
comprises network assets in 24 towns and cities. The assets don't
include KCOM's network assets in Hull and East Yorkshire in the
north of England.
Under the terms of the acquisition, CityFibre will provide KCOM
with access to the acquired infrastructure for up to fifteen years,
subject to a minimum term of five years and a yearly minimum
revenue of GBP5 million.
At 0826 GMT, CityFibre shares fell 19% to 54 pence. KCOM shares
rose 2.4%.
On CityFibre, Northland analyst David Johnson said given the
placing is priced at 50 pence, the stock was always likely to come
down to those levels.
Still, Mr. Johnson added the deal has logic for both
companies.
"KCOM successfully monetizes an under-utilized asset that was no
longer core to the company's strategy and thereby substantially
reduce its debt," he said.
"CityFibre substantially accelerates its footprint expansion,"
he added, enabling compete more effectively as an alternative to
telecoms operator BT Group PLC's (BT.A.LN) infrastructure division
Openreach in the wholesale fiber infrastructure market and to BT's
wholesale division for national service providers, data centers and
mobile operators.
--Write to Simon Zekaria at simon.zekaria@wsj.com
(END) Dow Jones Newswires
December 14, 2015 03:44 ET (08:44 GMT)
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