OTELCO agrees to be acquired by Oak Hill Capital

Last Thursday, representatives of Otelco announced that it had entered into a definitive agreement to be acquired by affiliates formed by Oak Hill Capital, a private equity firm. According to the press release, Oak Hill will acquire Otelco for $11.75 per share in cash, which represents an equity purchase price of $40.6 million and an enterprise value of $105.7 million.

As part of the definitive agreement, Oak Hill will also assume or refinance Otelco’s outstanding debt. Otelco’s Board of Directors, “approved and declared advisable the merger agreement, and Otelco’s Board of Directors recommended the approval and adoption of the merger agreement by the holders of shares of Otelco common stock,” the press release continued.

A special meeting of Otelco’s shareholders will be held following the filing of necessary documents with the Securities and Exchange Commission and subsequent mailing to shareholders. Otelco and Oak Hill expect to close by the end of this year.

“Like much of the telecommunications industry, Otelco is rapidly deploying technology, including fiber to the premise, to increase internet speeds for our customers,” commented Richard Clark, president and CEO of Otelco. “We have invested in fiber network construction over the last several years in response to the demand for higher bandwidth and have demonstrated our ability to deliver the necessary technology.

“Oak Hill has invested capital in other telecommunication providers to advance the deployment of the technology needed to support up to one gigabit internet speeds. Oak Hill’s commitment to facilitate Otelco’s growth will allow the company to accelerate fiber growth plans that would not have been possible within our existing capital structure.”

Stephen McCall, chairman of Otelco’s board of directors agreed. “This transaction is a good outcome for Otelco’s shareholders, customers, and employees. We believe Oak Hill will provide the resources to speed up our network upgrade plan.”

“Otelco has assembled a talented leadership team capable of ramping up their deployment of advanced technology solutions,” said Jennifer Jun, Principal at Oak Hill. “With our experience and capital, we can support Otelco’s mission to serve more customers with increasing broadband speeds. We look forward to working with Richard and the rest of Otelco’s senior management team in executing on Otelco’s next chapter of growth.”

Oak Hill Capital, headquartered in New York City, has managed funds with approximately $15 billion of initial capital commitments and co-investments since its inception.Over the past 34 years, Oak Hill and its predecessors have invested in more than 90 private equity transactions across broad segments of the U.S. and global economies.

For more information on Oak Hill Capital, check them out online at www.oakhill.com.