Altice USA has agreed to sell 49.99 percent stake in its Lightpath fiber enterprise business to Morgan Stanley Infrastructure Partners (MSIP) in a deal valued at $3.2 billion.
This represents a multiple of 14.6x FY 2019 Adjusted EBITDA and an Operating Free Cash Flow (Adjusted EBITDA less Capex) multiple of 25.7×1.
Altice USA will receive total gross cash proceeds of approximately $2.3 billion from the sale and related financing activity (net cash proceeds of approximately $1.1 billion after tax and initial debt repayment as described below).
Altice USA will retain a 50.01 percent equity stake in Lightpath and maintain control of the company.
The introduction of MSIP as a strategic investor will support growth initiatives at Lightpath, improve operational performance and provide strategic and financial flexibility.
“Lightpath is an expansive and best-in-class enterprise fiber communications business with tremendous long-term potential,” said Dexter Goei, chief executive officer of Altice USA, in a statement.
The transaction is expected to close in Q4 2020 following customary regulatory approvals.
A portion of the net proceeds after tax are expected to be used by Altice USA to repay debt. Remaining proceeds may be used for additional debt paydown and/or repurchase of Altice USA shares.