The Carlyle Group is seeking a decision from the state Public Utilities Commission on its pending purchase of Verizon Hawaii, which is headquartered on Bishop Street.
Verizon buyer to
use leverageThe Carlyle Group plans to employ
debt financing to buy Verizon Hawaii
The Carlyle Group, a Washington, D.C.-based private investment firm that signed a definitive agreement in May to buy Verizon Hawaii for $1.65 billion, has asked the state Public Utilities Commission to make a decision on the deal by Dec. 15.
The purchase is a leveraged one, in which the Carlyle Group would fund the deal with potentially more than 80 percent in debt financing.
In a June 21 PUC application filing, the Carlyle Group said it would fund the purchase with at least $289 million in cash, or 17.5 percent of the total. The balance would come from various financing instruments: about $700 million in senior secured term financing facilities, such as bank and insurance company debt; and approximately another $700 million in senior subordinated and senior unsecured high-yield bonds. The $1.4 billion in financing and the $289 million in cash roughly equals the $1.65 billion offer price.
Of the near $300 million in cash, up to $100 million will be used to fund capital investment in back-office infrastructure and transition expenses.
The Carlyle Group said in the filing that Verizon Hawaii has $425 million in third-party debt -- such as the cost of equipment -- which will be repaid through the Carlyle Group's financing.
The group, which has recruited local investors, said in the filing that all senior management will be full-time residents of Hawaii. It also said that to promote stability during the transition to independent ownership "employees that devote substantially all of their time to support Verizon Hawaii ... will have the opportunity to remain employed ... in the same or comparable positions and with at least the same base pay and comparable total compensation (taking into account base pay, bonus and other incentive compensation)."
The group's application started the clock ticking on a 20-day period in which interested persons or entities can file a motion to intervene or participate in the proceeding.
Intervention would allow a party to get all the documents and go through the discovery process and ask questions of the Carlyle Group. Participant status can be limited by the three-member commission.
When the 20-day period ends on July 11, the commission will decide whether to grant or deny the parties' respective motions.
Meanwhile, the Carlyle Group is one of three finalists to purchase the Guam Telephone Authority and recently purchased a 60 percent stake in Tokyo-based wireless Internet access provider DDI Pocket.
