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Cincinnati Bell Closes on Purchase of Hawaiian Telecom PDF Print E-mail
Wednesday, 11 July 2018 07:54

Cincinnati Bell closed its acquisition of Hawaiian Telcom, a $650 million cash and stock transaction that was first announced a year ago.

Cincinnati Bell will pay about 60 percent cash and 40 percent stock for Honolulu-based Hawaiian Telcom, while Toronto-based OnX will be bought with cash, according to the agreements. The combined company will have 14,000 route miles of fiber and access to an undersea cable connecting with Asia.

“Our focus for the past several years has been investing in fiber,” Leigh Fox, Cincinnati Bell’s chief executive officer, said in an interview. “We have a dense local fiber network but we were only growing slowly outside Cincinnati. With Hawaii and OnX, we’re creating a national player.”

The combined company will have a net operating loss, or NOL, tax credit exceeding $300 million, saving it from cash tax payments for several years, Cincinnati Bell executives said on a conference call Monday. The combination will also yield about $21 million in cost synergies over a two-year period, the executives said.

Hawaiian Telcom Chief Administrative Officer and General Counsel John Komeiji was appointed president and general manager following the acquisition, replacing Scott Barber as head of the Hawaii-based company.

“Joining forces with Cincinnati Bell is a milestone in this journey that positions Hawaiian Telcom for long-term success, enabling us to continue investing in Hawaii and unlocking new opportunities for innovation and growth,” Komeiji said in a statement. “I’m humbled and excited to work with our local leadership team and employees to engage with our communities as we expand our statewide fiber network and deliver advanced services to more customers.”

As part of the terms of the deal, Hawaii residents and former Hawaiian Telcom (Nasdaq: HCOM) board members Walter Dods and Meredith Ching have been appointed to Cincinnati Bell’s (NYSE: CBB) board of directors, which has expanded from nine to 11 members.

“I take my responsibility as a Cincinnati Bell board member seriously and pledge to ensure that Hawaii and Hawaiian Telcom are well represented at the corporate level, especially when broader strategic decisions are made,” Dods said in a statement.

The former chairman of First Hawaiian Bank served on Hawaiian Telcom’s board of directors since 2005. He served as board chairman from 2008 through 2010, and as chairman of the Nominating and Governance Committee since 2010.

“Cincinnati Bell’s desire to expand its board of directors to include two local residents speaks volumes about their commitment to Hawaii,” Ching said in a statement. Ching was appointed to Hawaiian Telcom’s board of directors in 2015.

Following the acquisition, Hawaiian Telcom promoted Executive Director of Marketing and Communications Su Shin to the newly created position of chief of staff, where she will assist Komeiji with day-to-day management of personnel and execution of strategic initiatives.