WideOpenWest: Financing the Knology Acquisition
(7 pages of text)
In the spring of 2012, a U.S. Internet, cable television, and telephone service provider—owned by a private equity group—approached a bank holding company to participate as a co-manager in a highly leveraged transaction in the cable industry. The transaction was the buyout of a smaller publicly traded cable company. The deal would require additional equity investment from the private equity group and a restructuring of the debt of both companies. Although the involved companies' management teams were excited about the opportunity, they knew that executing the deal would not be easy; the level of leverage would be the highest of any deal in the cable industry—or any industry—since before the 2007 economic downturn.
The case is intended for graduate-level students in a finance elective or higher-level corporate finance course. The primary objective is to understand the internal process of bank holding companies in analyzing and approving complex, highly leveraged transactions. Specifically, after completing the case, students should be able to
- explain the roles of various departments in bank holding companies;
- understand the risks and complexities of structuring a highly leveraged transaction from the perspective of the lender/underwriter; and
- apply corporate finance modelling techniques to build a simple leveraged buyout model for testing various capital structure assumptions.
Information, Media & Telecommunications
United States, Large, 2012
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