Communications Sales to issue 87,500 shares of convertible preferreds to help fund acquisition

By Lisa Kerner

Charlotte, N.C., Jan. 7 – Communications Sales & Leasing, Inc. said it will issue 87,500 shares of its 3% series A convertible preferred stock to help fund its $409 million acquisition of privately owned PEG Bandwidth, LLC from affiliates of Associated Partners, LP.

President and chief executive Kenny Gunderman discussed the proposed stock-and-cash transaction during a presentation at the Citi 26th Annual Internet, Media & Telecommunications Conference on Thursday in Las Vegas.

The company will also use $315 million of cash on hand and issue 1 million shares of common stock.

Communications Sales expects to fund the cash portion of the deal using a portion of its $200 million cash on hand and borrowings under its $500 million undrawn revolving facility, said chief financial officer Mark Wallace.

The transaction is slated to close in April.

Wallace expects the company’s net debt to be $3.8 billion post transaction, or 5.5 times pro forma EBITDA.

Citigroup and Stephens Inc. served as financial advisers.

Communications Sales & Leasing is an internally managed triple-net-lease real estate investment trust based in Little Rock, Ark.

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