ATN International reported a planned divestiture of its portfolio of 214 towers in the Southwestern U.S., entering into a sale agreement with Everest Infrastructure Partners valued at up to $297 million in cash. The disclosure came ahead of the market and coincided with a 15.9% rise in ATN's shares during premarket trading on Thursday.
Company management said the transaction will allow ATN to "unlock the inherent value" of the tower assets and is slated to begin closing in the second quarter of 2024. Under the terms disclosed, ATN anticipates receiving initial gross proceeds in the neighborhood of $250-$270 million, followed by subsequent closings that could add between $27 million and $47 million within the next twelve months, contingent on construction and operational milestones.
ATN's leadership laid out planned uses for the proceeds. The company intends to allocate approximately $70 million from the initial cash infusion to repay borrowings under its CoBank revolving credit facility. Management also said it will direct funds toward ongoing operations and select growth opportunities while using the remainder to reduce leverage.
ATN provided an estimate of transaction-related costs and other outflows, stating that taxes, payments to minority investors, and transaction expenses are expected to consume roughly 25-30% of the gross proceeds.
On a pro forma basis after the sale is fully complete, ATN projects the transaction will reduce consolidated and U.S. Telecom segment annual revenue by $5-$7 million, operating income by $4-$6 million, and EBITDA by $10-$13 million.
The sale remains subject to customary closing conditions. Those include obtaining required third-party consents and satisfying obligations under the Hart-Scott-Rodino Act, among other standard closing requirements.
Key points
- ATN agreed to sell 214 Southwestern U.S. towers to Everest Infrastructure Partners for up to $297 million in cash.
- Initial gross proceeds are expected to be about $250-$270 million, with an additional $27-$47 million possible over the following year based on milestones.
- Proceeds will be used to reduce debt - including roughly $70 million to repay the CoBank revolver - support existing operations, and pursue selected growth initiatives; the deal will modestly reduce revenue, operating income, and EBITDA.
Risks and uncertainties
- The transaction is conditional on customary closing requirements, including third-party consents and compliance with the Hart-Scott-Rodino Act - any delays or failures to satisfy these conditions could affect timing or completion.
- Actual cash received will be reduced by taxes, payments to minority investors, and transaction expenses, which ATN estimates at approximately 25-30% of gross proceeds.
Investors should note the company has quantified the expected near-term financial impact of the sale: an annual revenue reduction of $5-$7 million, operating income reduction of $4-$6 million, and an EBITDA decrease of $10-$13 million upon full completion.