BREAKING: Virgin Mobile USA to Acquire Helio For $39 Million In Equity
As we reported earlier in the week Virgin Mobile USA will acquire Helio from SK Telecom and EarthLink, for limited partnership units equivalent to 13 million shares of Virgin Mobile USA class A common stock, with a value of $39 million based on the closing price of $2.99 - Virgin Mobile USA’s class A shares on June 26, 2008.
In addition, the company will take on a fresh $50 million of investments from Virgin Group and SK Telecom ($25 million from each) at a price of $8.50 per share.
Helio’s 170,000 Pay Monthly users, with an ARPU of approximately $80 will be migrated into Virgin Mobile. This is less than the 200,000 users Helio was reportedly thought to have.
Dan Schulman, Chief Executive Officer, Virgin Mobile USA, said, “We believe that the acquisition of Helio and the related strategic investments by SK Telecom and Virgin Group are of enormous benefit to our business, both financially and strategically. The reduction of our long-term debt and the increase to our revolver will realign our capital structure, providing us with greater liquidity and increased flexibility to grow our business. At the same time, we will acquire an asset, which will add to our scale, allowing us to reduce our network costs and assure that Helio’s customers are immediately profitable when brought on to our cost structure. We expect the combined elements of this deal will drive increased Adjusted EBITDA and free cash flow.”
Virgin Mobile USA will gain Helio’s established and highly advanced postpaid billing and customer care platform and a handset inventory of approximately 85,000 units with a book value of approximately $17 million.
The transaction is expected to close in the third quarter of 2008, subject to receiving regulatory approvals and satisfaction of other customary closing conditions.
Source: Press Release via Yahoo.
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