Citizens Exits Distribution, says 'Hello' to Telecom
Seeking increased growth opportunities, Citizens Utilities of
Stamford, CT, is getting out of the business of distributing gas,
electricity and water in order to invest in telecommunications. The
company is divesting its Public Services distribution businesses,
as well as its wastewater treatment business. As previously
announced, Citizens plans to fund $2.3 billion of telephone access
line acquisitions with sale proceeds.
The telecommunications acquisitions, definitive agreements for
which were signed in May and June, will make Citizens among the
largest telecommunications companies in the nation, with about 1.7
million access lines in 21 states. The acquisitions are expected to
close in 2000.
"We believe that the significant recent demand for distribution
properties in each of our Public Services business sectors, coupled
with the high quality of Citizens' properties, creates an
outstanding opportunity to maximize value for our security
holders," said Robert J. DeSantis, chief financial officer.
"Our strategy is to realize the hidden value of our Public
Services properties and use the proceeds to significantly expand
our telecommunications business. We expect to sell assets for
double-digit multiples of cash flow and use the proceeds to fund
assets that we have purchased for single-digit multiples of cash
flow-in a business that grows twice as fast as those businesses we
"This acquisition and divestiture process should add significant
incremental EBITDA with no increase in long-term debt. These
transactions will clearly establish Citizens as a pure
telecommunications company, focusing its expansion on a business
sector that commands higher public and private market values."
Citizens Public Services serves about 900,000 customers in 10
states. Combined Public Services revenues were about $610 million
in 1998. A company spokeswoman did not return a call for further
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