Madison, Wisc.-based-based TDS Broadband Service LLC says it expects to complete an $80 million purchase of Continuum, the communications company owned jointly by the towns of Mooresville and Davidson, by the end of 2019.
The proposed buyer was revealed Tuesday as commissioners in both towns agreed to ask voters in both towns to approve the sale in a November referendum. The Continuum board of directors on Tuesday approved pursuing the deal with TDS.
“We are pleased there was such a strong business interest in the purchase of Continuum,” said Mooresville’s Interim Town Manager Ryan Rase. “While many would have just focused on the dollars, we took a holistic approach and looked critically at finances, as well as industry reputation and strong community commitment.”
The towns agreed to pursue a sale in March. Six offers, all of at least $70 million, were received April 23 through RBC Capital Markets, the towns’ financial adviser on the sale.
The second round of offers June 13 ranged from $60 million to $80 million.
On June 18, RBC “gave three offerors three days to sharpen their financial offer and Asset Purchase Agreement,” the towns said in a press release.
Two final offers June 21 were between $75 million and $80 million.
“With the highest and most responsive offer received by the deadline, TDS was selected on July 1 as the proposed buyer for Continuum,” the towns said.
The Towns agreed on July 3 to negotiate exclusively with TDS as the potential buyer for Continuum.
“We and Mooresville and Davidson selected TDS because of the strength of its proposal and its leadership in the industry, specifically in areas of our size and geography,” said Robert Guth, interim CEO of Continuum. “I strongly believe TDS will carry forward our local vision and continue to deliver a next generation set of communication services to our residential and business customers today and for many years to come.”
Continuum’s 70 employees will be offered positions at TDS, although not necessarily locally, the company said.
“We are looking forward to expanding our operations into the vibrant state of North Carolina,” said Jim Butman, president and CEO of TDS Telecom, under which TDS Broadband Service operates. “We expect to build off of the excellent operations and services provided by Continuum and look forward to welcoming their employees to our team.”
Mooresville and Davidson – on a 70-30 split of financial responsibilities – purchased a bankrupt cable television provider in 2007, eventually acquiring $92 million in debt to own and operate the company.
According to the purchase agreement, “net proceeds of sale will be used to satisfy the balance due on the installment financing of approximately $59 million and all other obligations, and the remainder will go to the Towns of Mooresville and Davidson in accordance with their respective interests in Continuum.”
According to financial offices in both towns, to date Mooresville has contributed $32.7 million to the Continuum partnership and Davidson has contributed $11.5 million. This year’s annual debt installment payment of $4.64 million has not yet been made.
Also, due to a 2013 partnership agreement amendment allowing Davidson to limit its annual Continuum contribution to $1 million – less than 30 percent of the yearly payment – Davidson’s deferred liability to Mooresville as of June 30 this year was $1.75 million.
TDS Broadband Service at a glance
Customers: 300,000 connections
Services: Cable TV, broadband internet and phone
Service areas: Nearly 900 communities in Arizona, Colorado, Nevada, New Mexico, Utah, Texas and Oregon.
Operations: TDS Broadband Services is operated by TDS Telecommunications LLC, which has more than 1.2 million connections and employs nearly 2,700 people in 30 states. TDS Telecommunications is a subsidiary of Telephone and Data Systems Inc., a Fortune 1000 company.