A raft of document requests probing the inner-workings of the proposed $17.7 billion merger of Netherlands-based telecom company Altice and Cablevision Systems surfaced publicly Tuesday at the New York Public Service Commission.
The requests, issued over the last several months and as recently as last week, provide a detailed glimpse into what aspects of the merger will be focused on by the NYPSC staff as part of their examination.
A source close to the proceedings told CTFN that the document requests have just surfaced and should be viewed as important to the proceedings as they move forward.
Among the requests put to the two companies are Cablevision journal entries about the pending acquisition, along with an explanation of the credit support that Altice will provide Cablevision if the deal is approved, and a detailed breakdown of the estimated $900 million in expected annual synergies the merger partners have touted resulting from the transaction.
The NYPSC‘s staff also wants the two companies to confirm whether more than 300 Cablevision executives earn $300,000 or more per year, and asks the merger partners to comment on remarks by one analyst that Altice could cut $300 million from employee compensation in the first year after the deal is closed.
The document requests come as concern over the deal and its impact has been voiced by the New York City mayor’s office and by the Communications Workers of America, which represents some of Cablevision’s employees. The office of New York Mayor Bill de Blasio has been taking a close look at the merger to see if its in the public interest. As Maya Wiley, the mayor’s legal counsel, told CTFN in a recent email, “We want to make sure our residents are getting the services they deserve and that a change in ownership does not mean that New Yorkers are shortchanged on quality of service, quality of infrastructure, consumer protection and jobs.”
The city has been in negotiations with the companies over proposed transfers of control, sources tell CTFN.
The CWA, meanwhile, is demanding more specifics from the companies about how the deal would impact its union members. But the CWA has complained that the companies submitted heavily redacted documents that make it difficult to analyze for the purpose of commenting on the deal. The union contends that the merger will “more than double Cablevision’s already heavy debt load to a staggering $14.4 billion.”
For their part, the two companies contend that the documents that the CWA wants to see contain confidential and trade secret information that could be used in labor negotiations.
In its own filings, the NYPSC not only wants more details on where Cablevision’s customers are located by region (the New York metropolitan area, Long Island, Westchester County), but what Altice’s plans are with respect to Cablevision’s suite of offerings following the proposed transaction. The state regulators also have asked Cablevision to provide documents pertaining to it’s current stand-alone broadband services for residential and small business customers in New York; the number of subscribers using those services, including upload and download speeds; and the total number of homes including the name of the offering and customers presently subscribing to its various services.
Also requested is the pro forma balance sheet, income statement, and statement of cash flows for the most recent 12-month period “reflecting the combination of Altice, Cablevision and Suddenlink Communications.” The Federal Communications Commission recently approved Altice’s $9.1 billion acquisition of Suddenlink, which is the nation’s seventh largest cable operator.
The NYPSC noted that a redacted response by Cablevision dated January 5, 2016, “appears to indicate that the transaction’s synergies will eventually ramp up to a year by year run rate of $900 million per year.” The staff wants the company to clarify what is meat by “begin” and it states that “Altice estimates that, over an approximately five-year period, it will be able to begin realizing approximately $900 million in annual cost savings.”
According to the filings, Altice and Cablevision have said that the projected $900 million in cost savings “will not be realized immediately or annually. Rather, this is the amount Altice expects to realize over an approximately three-to-five year period.”
Moody’s, the staff noted, has said that Altice can reasonably expect to achieve about $450 million in savings “in a phased approach over a two or three year timeframe,” particularly “given Cablevision’s below-average pre-deal margins, historical expenses related to its family ownership and Altice’s management experience with acquisitions within the cable industry.”
©2016 CTFN. All rights reserved. No reprints, forwarding, sharing, or redistribution permitted. Use of this article is subject to the CTFN Terms of Service.
Bringing the marketplace leading coverage of mergers and corporate developments, CTFN‘s seasoned reporters pursue news that matters to event-driven investors and deal professionals. Learn more at ctfn.news. For subscription inquiries email email@example.com or call +1 203 635 3400.