Cable & Wireless Communications Plc (“CWC”) today announced an agreement to sell Cable & Wireless Bermuda, its operating business in Bermuda, to The Bragg Group for total consideration of US$70 million.
CWC also announces today an on-market share buyback programme of up to US$100 million in order to return capital to our shareholders.
The Bermuda divestment is consistent with CWC’s strategy to reshape its portfolio and develop the business around full-service telecommunications operations in a series of core regional hubs. The consideration of US$70 million will be paid in cash by The Bragg Group and represents a multiple of 6.5x 2009/10 EBITDA. The transaction is subject to government and regulatory approvals and is expected to be completed by the end of March.
Cable & Wireless Bermuda, which is part of CWC’s Monaco & Islands unit, is an international
gateway business providing data capacity, carrier, internet and International Direct Dialling (IDD) calling services. Cable & Wireless Bermuda also provides data centre and disaster recovery services to the corporate community, and partially owns a Bermudian alternative local network provider. The Bragg Group is a leading Canadian-based cable and telecommunications provider, operating under the Eastlink brand.
CWC also owns stakes in two international cable systems which land in Bermuda that are operated separately and not part of the transaction.
Cable & Wireless Communications Chief Executive, Tony Rice commented:
“Today’s announcements, together with our signing of the agreement to acquire majority control of BTC earlier this month, represent the first steps in our reshaping of the group as outlined at the time of the demerger last year. Bermuda does not fit our business model as it is not a full-service operation while BTC provides excellent opportunities and a strong strategic fit with our Caribbean business. The US$70 million consideration represents an excellent return on our long-term investment in Bermuda.
“The share repurchase programme of up to US$100 million is consistent with our policy to seek the best opportunity for increasing shareholder value with the Group’s available cash resources. I am pleased that we are developing our portfolio management approach in tandem with our progress in developing the businesses.”