84.7 F
Charlotte Amalie
Monday, May 20, 2024
HomeNewsLocal newsATN to Acquire Innovative Group of Companies

ATN to Acquire Innovative Group of Companies

In a move that brings the saga of the Virgin Islands telecommunications industry full circle, ATN on Thursday announced it has entered an agreement to acquire control of the Innovative Group, which operates cable television, Internet and landline phone services in the U.S. Virgin Islands.

ATN is the once and future owner of Innovative, the company that bought the Virgin Islands Telephone Company known as VITELCO in 1989. ATN announced it has entered into an agreement to acquire all of the membership interests of Caribbean Assets Holdings LLC, the holding company for the Innovative group.

ATN is acquiring the assets from the Rural Utilities Cooperative Finance Corporation (CFC), which acquired the Virgin Islands utility in 2010.

ATN will purchase the Innovative operations for approximately $145 million, subject to certain purchase price adjustments, with $85 million payable in cash and the option to finance the remaining $60 million of the purchase price with a loan from an affiliate of CFC, the Rural Telephone Finance Cooperative.

With the purchase, ATN’s current operations in the U.S. Virgin Islands under the "Choice" name will be combined with Innovative to deliver residential and business subscribers a full range of telecommunications and media services, according to the announcement.

Subject to customary closing terms and conditions, ATN expects to complete the transaction in mid-2016.
"This transaction is aligned with our strategy of building out our service offerings in geographies where we see the potential to create long-term value," said ATN Chief Executive Officer Michael Prior.

"ATN’s Choice subsidiary has been providing a variety of telecommunications services in the U.S. Virgin Islands for the past 16 years and it is a market we know well,” Prior said. “With this acquisition, we will have a strong foundation for delivering a high quality, comprehensive range of residential and business services."

ATN was formed in 1988 by Jeffrey Prosser and Cornelius B. Prior Jr., father of Michael Prior. After a decade of internal squabbling and lawsuits based on what Prior described as "the years-old inability of Mr. Prosser and me to agree on strategic and specific issues," the two men split the company’s assets in 1997, with Prior keeping the company’s assets in Guyana and Prosser keeping control of the Virgin Islands holdings. (See "Luxner News Service article in links below)

A decade later, the National Rural Utilities Cooperative Finance Corporation acquired Innovative when Prosser entered involuntary Chapter 7 bankruptcy and ICC, the parent company of VITELCO, Innovative Cable, TV Channel 2 and other local companies, entered Chapter 11. The finance company was by far the biggest creditor in the proceedings and took over the company to protect its half-billion dollar investment.

When CFC transferred Innovative to its Caribbean Assets Holdings LLC, it said it did not aim to own or operate utilities and planned to sell it as soon as feasible. Over the last few years, it has invested more than $100 million into the network to try to increase the company’s potential sale value.

CFC made substantial investments and improvements in Innovative since taking ownership, but the company has been operating at a loss, Michael Prior observed.

"Our goal is to use our deep local roots, significant investment capability and decades of telecom operating experience to deliver services to customers at a great value and with a superior customer experience, and all of our employees will be completely focused on that mission," he said. "We embrace the challenge of continuing and expanding on CFC’s progress and returning this business to profitability."
ATN is also acquiring Innovative’s smaller cable TV operations in the British Virgin Islands and St. Maarten as part of the transaction.

For its most recently completed fiscal year, ended May 31, Innovative’s companywide operations had approximately $100 million in revenue. ATN expects the combined company to have aggregate annual revenues of around $110 million and initial margins between 20 and 25 percent for the first full year of operations (excluding one-time integration and transactional expenses), the company said in its news release Thursday announcing the acquisition.

ATN, whose full corporate name is Atlantic Tele-Network Inc., is headquartered in Beverly, Mass. It provides telecommunications services to rural, niche and other underserved markets and geographies in the United States, Bermuda and the Caribbean, and owns and operates solar power systems in select locations in the United States.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.