THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, January 27, 1995 TAG: 9501270604
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 94 lines
Tele-Communications Inc. on Thursday completed its $1.6 billion buyout of Norfolk-based TeleCable Corp., following approval of the stock-swap merger by TeleCable's shareholders and federal antitrust regulators.
The deal between TeleCable and TCI, the nation's largest cable-TV operator, was first announced last August. It is one of about a dozen major mergers within the rapidly consolidating cable industry over the past year.
TeleCable's shareholders overwhelmingly approved the transaction during a Thursday morning meeting at the Norfolk Waterside Marriott. Almost simultaneously, the Federal Trade Commission announced it had given the merger antitrust clearance, provided TCI sell either its or TeleCable's cable system in Columbus, Ga.
TCI finalized the buyout within hours of the two actions.
TeleCable President Richard D. Roberts said in an interview earlier this week that TCI plans to move quickly to fold TeleCable's 15-stateoperation into its own. He said TeleCable's 80-person headquarters in downtown Norfolk will close later this year. TeleCable's telemarketing operation in Chesapeake, staffed almost exclusively by part-timers, will likely be kept open by TCI, he added.
Privately held TeleCable, with $287 million in 1993 revenues, is the seventh-largest independent company based in Hampton Roads. But with 750,000 subscribers, it ranks 19th among the nation's largest cable operators and is only about one-twentieth the size of TCI and its affiliates.
TeleCable's senior managers have been concerned for some time that the company, despite being generally regarded as well run, might get bowled over by larger telecommunications players. So in January 1993, they started a study of the company's future. They concluded that TeleCable didn't have the financial, managerial or technological resources needed to prosper over the long term.
With the help of investment banking firm Lehman Brothers, the company started scouting early last year for buyers. The final offer from Englewood, Colo.-based TCI was as much as $117 million more than that of an unspecified second finalist, according to a TeleCable document filed last month with the Securities and Exchange Commission.
Under the deal, TeleCable's roughly 160 shareholders will get about $1 billion in TCI common stock and another $300 million worth of dividend-bearing preferred shares that can be converted to common stock. In addition, TCI will assume TeleCable debt of nearly $300 million.
The bulk of the TCI stock - about $700 million worth - will go to TeleCable's 24 executive officers and directors, based on information in the TeleCable proxy document filed with the SEC, and on recent TCI stock prices.
TeleCable Chairman Frank Batten, either directly or through a trust, will receive about $500 million worth of TCI stock. His son, Frank Batten Jr., a TeleCable director, will control TCI shares worth about $65 million - again either directly or through a trust.
Frank Batten is also chairman of Norfolk-based Landmark Communications Inc., parent of The Virginian-Pilot and The Ledger-Star. He oversaw TeleCable's launch in 1964 and has been the company's chairman since it was spun off from Landmark in 1984. Frank Batten Jr. is the newspapers' president and publisher.
Other major beneficiaries of the TeleCable sale include TeleCable President Roberts, who will receive about $23 million worth of TCI stock, and TeleCable directors Richard F. Barry III and George M. Kaufman, who will receive TCI stock worth about $19 million and $18 million respectively. Part of Kaufman's TCI stock will be in a trust of which he is the beneficial owner, according to the SEC document.
TeleCable's shareholders, many of whom are current or former managers of TeleCable and Landmark, also stand to be paid higher dividends from their holdings of TCI preferred stock, the document reported. It said that TeleCable paid its shareholders combined annual dividends of $8.7 million and that the new TCI preferred shares will yield the same shareholders $16.5 million a year.
Roberts, a former chairman of the National Cable Television Association, said he hasn't decided what he will do now that TCI has taken over. He said he intends to remain active in business, though not necessarily in the cable industry.
He and the other four most senior TeleCable executives, he said, ``took a pledge that we would not even focus on personal matters until this mission is completed.''
Some of TeleCable's headquarters employees have already been offered jobs elsewhere by TCI and some are entertaining offers from other companies, he said. ``A lot of people are going to have soft landings,'' he added.
The 1,800 employees of TeleCable's 21 operating systems - all located outside of Hampton Roads - are expected to be little-affected by the takeover. They are located as far away as Texas.
In a prepared statement, TCI Chief Executive Brendan Clouston said: ``The quality, integrity and professionalism of TeleCable management and employees are well known, and we look forward to working together.'' ILLUSTRATION: Color photo
TeleCable Corp. President Richard D. Roberts
by CNB