|The Pritzker Organization to Acquire Fiber Network of Hargray|
|Tuesday, 14 March 2017 10:50|
Hargray Communications Group, Inc. ("Hargray") and The Pritzker Organization, L.L.C. ("TPO") announced that the Tom Pritzker Family Business Interests ("PFBI") advised by TPO, along with Redwood Capital Investments, Stephens Capital Partners, and management have agreed to acquire Hargray in an all-cash transaction.
Tom Pritzker and the Pritzker family are most famous for owning the Hyatt hotel chain, and the Marmon Group, conglomerate of manufacturing and industrial service companies which has since been sold to Berkshire Hathaway.
Other Pritzker holdings have included the Superior Bank of Chicago, which notably collapsed in 2001. In July 2001, Superior was seized by federal banking regulators after the Pritzkers reneged on a recapitalization program. The Pritzker family entered into a $460 million, 15 year, interest-free settlement in December 2001 to protect the family's business reputation and avoid civil forfeiture and litigation. According to The Washington Times, "But after paying $316 million of the interest-free debt, the family quietly struck a deal with the Federal Deposit Insurance Corp. (FDIC) in June 2011 to discount the balance in return for paying off the debt early. Ms. Sweet and Mr. Courtney are among 1,400 depositors still owed $10.3 million at the end of March, records show. The FDIC Insurance Fund is still out $296 million after paying off Superior's insured depositors. It is highly unlikely the remaining depositors or the FDIC will receive much more money since nearly all of the settlement funds have been paid out, according to records and interviews." At the time, Superior Bank was the largest bank failure in more than a decade. As of March 2012, former Superior Bank depositors are still owed over $10 million.
In 1995, Jay Pritzker (cofounder of Hyatt) stepped down and Thomas Pritzker took control of the Pritzker Organization. When Jay died in 1999, the family decided to split the business into 11 pieces worth $1.4 billion a piece, but had to settle a lawsuit from two family members who received $500 million each.
In 2011, the dissolution had been completed and each of the cousins had gone their separate ways, with some pursuing business and others pursuing philanthropic or artistic ventures.
Hargray is the broadband communications and entertainment provider to the Lowcountry region of South Carolina and a growing set of communities throughout Georgia. Over the last ten years, the company has invested over $250 million to create an industry leading communications network that includes 2,000 route miles of fiber and serves over 65,000 customers.
Michael Gottdenker, Hargray's Chairman & CEO, said, "We are looking forward to partnering with The Pritzker Organization, Redwood Capital Investments, and Stephens Capital Partners. This transaction will mark a new era for our organization, returning us to family ownership following ten great years with Quadrangle Capital Partners. While our current management team will continue to manage the company following the transaction, our new owners will provide a permanent capital base from which we will be able to continue to invest in our network, enhance our products and services, and pursue our mission to envision and deliver customer delight. This transaction is great news for our customers, our colleagues, and the communities we serve."
Tom Pritzker, Chairman and CEO of The Pritzker Organization, said, "Hargray has an exceptional team and a proven track record of delivering value to its customers. We are delighted to have the opportunity to participate in and support the growth of the business over the long term. Throughout our history, we have looked for great companies and partnered with strong management teams to build durable businesses for the future."
Credit Suisse, SunTrust Robinson Humphrey, Inc., and Antares Holdings are providing debt financing and acting as lead arrangers and book running managers. Credit Suisse will serve as administrative agent. Davis Polk & Wardwell LLP served as legal advisor to Hargray, Latham & Watkins LLP served as legal advisor to TPO and the PFBI, and Cahill Gordon & Reindel LLP served as legal advisor to the lenders. McNally Capital sourced the transaction for TPO and advised the buyer, who was also advised by BDT & Company.
Terms of the transaction were not disclosed. The transaction is expected to close in the third calendar quarter.