June 5, 2012
/PRNewswire/ -- General Communication, Inc. ("GCI") (NASDAQ:GNCMA) and Alaska Communications Systems Group, Inc. ("Alaska Communications") (NASDAQ:ALSK) announced today that they have signed definitive agreements to form The Alaska Wireless Network, LLC (AWN), a
limited liability company that will hold and operate both companies' wireless facilities. AWN will design and operate an
statewide wireless network to provide next generation wireless service plans for GCI and Alaska Communications wireless customers. GCI and Alaska Communications will continue to market and sell these plans independently to their respective retail customers.
Under the terms of the definitive agreements, which have been approved by the boards of directors of each company, GCI and Alaska Communications each will contribute to AWN their respective wireless assets, including spectrum licenses, cell sites and backhaul facilities, switching systems, and certain other assets necessary to operate a statewide wireless network. As part of the transaction, GCI will purchase
of wireless assets from Alaska Communications and contribute them to AWN.
Alaska Communications will own one-third and GCI will own two-thirds of AWN. During the first four years of AWN's operations, Alaska Communications will be eligible to receive preferential cash distributions totaling
. GCI will receive all remaining available cash distributions over the same period. Following the initial four year period, GCI and Alaska Communications will receive distributions proportional to their ownership interests in AWN.
AWN will be managed by GCI.
, GCI's current chief operating officer, has agreed to serve as AWN's first president and chief executive officer (CEO). In the interim before the closing, Hughes will serve as GCI's executive vice president – wireless and lead a GCI team planning the post-closing transition to AWN. The AWN transaction is subject to Hart-Scott-Rodino review, requires FCC approval for transfer of Alaska Communications, and GCI's wireless spectrum licenses to AWN and is subject to other customary conditions. The transaction is expected to close by the second quarter of 2013.
"GCI and Alaska Communications are pleased to reach these agreements," said Alaska Communications president and CEO
and GCI president and CEO
. "The wireless business is capital intensive, requires scale to compete successfully against national carriers, and demands more spectrum than either company individually owns. By combining our respective wireless assets, GCI and Alaska Communications can provide a state-of-the-art
wireless network owned and operated by Alaskans for Alaskans. We believe that The Alaska Wireless Network will provide the fastest, most geographically extensive, and most reasonably priced wireless services for
subscribers, allowing us each to compete more effectively in the retail market."
From the start, AWN will have the most extensive coverage in
, covering more than 95 percent of
's population. Initially, AWN will serve the more than 250,000 GCI and Alaska Communications urban and rural subscribers and lifeline subscribers. In its first year of operations, AWN is expected to have EBITDA of approximately
and capital expenditures of approximately
. Synergies from the transaction are expected to total
a year, starting in the second year of operations. The synergies are expected to be split equally between capital and operating expenses.
GCI expects to finance the
asset purchase by refinancing its senior credit facility. Exclusive of transaction fees, Alaska Communications intends to use all the upfront cash proceeds of
to strengthen its balance sheet by both paying down some of its term loan facility and increasing cash reserves. Evercore Partners served as advisor for Alaska Communications in this transaction.
About Alaska Communications
Communications (NASDAQ:ALSK) is a leading provider of high-speed wireless, mobile broadband, Internet, local, long-distance and advanced broadband solutions for businesses and consumers in
. The Alaska Communications network includes advanced broadband and voice networks and the most diverse undersea fiber optic system connecting
to the contiguous
. For more information, visit
A pioneer in bundled services, GCI is a top provider of voice, data, and video services to
consumers with a 70 percent share of the consumer broadband market. GCI is also the leading provider of communications services to enterprise customers, particularly large enterprise customers with complex data networking needs. More information about GCI can be found at
Non-GAAP Financial Measures
This joint release includes information related to management's estimate of EBITDA for AWN. EBITDA, in this context, may not be consistent with EBITDA measures used by other companies, are not measurements under generally accepted accounting principles (GAAP) and should not be considered a substitute for other measures of financial performance recorded in accordance with GAAP. Management of GCI and Alaska Communications believe that EBITDA provides useful information to investors.