Cogeco Câble inc.

June 02, 2006 23:59 ET

Cogeco Cable enters into an agreement to purchase Cabovisao - Televisao por Cabo, S.A.

MONTREAL, June 2 - Cogeco Cable Inc., the second largest
cable operator in both Ontario and Québec and the fourth largest in Canada,
has entered into an agreement with Cable Satisfaction International Inc.
(CSII), Catalyst Fund Limited Partnership I (Catalyst) and Cabovisao-Televisao
por Cabo, S.A. ("Cabovisao"), to purchase, at a cost of (euro) 464.9 million,
all the shares of the second largest cable operator in Portugal, an indirect
wholly-owned subsidiary of CSII. The price includes the purchase of senior
debt and reimbursement of certain other liabilities of Cabovisao. The agreed-
upon purchase price for the shares and senior debt corresponds to a multiple
of 10.6 of operating income before amortization(1) for the first quarter ended
March 31, 2006 (annualized) and a multiple of 12.6 of operating income before
amortization over the last 12 months ended March 31, 2006. The final purchase
price will be determined following completion of a post-closing working
capital adjustment. This acquisition is in accordance with the external growth
strategy announced by Cogeco Cable last October.

"Cabovisao is well positioned in the high-growth cable telecommunications
market in Portugal, including the Aveiro, the Lisboa-Palmela, the Caldas and
the Alentejo regions. Cogeco Cable is pleased with its growth potential and
expects to make attractive additions to the services already provided to its
customers thanks to its modern distribution infrastructure. In addition,
Cogeco Cable will share with Cabovisao its knowledge of the cable distribution
industry which it has developed over the last 35 years and which will also
foster stability in the ownership and management of that company. Cogeco Cable
believes that there will be continued growth in the dynamic telecommunications
market in Portugal. This acquisition is consistent with Cogeco Cable's pursuit
of external growth opportunities in the past and enables the Corporation to
take part in the development of the cable telecommunications sector in Europe.
In the future, Cogeco Cable's shareholders can expect management to use the
same level of discipline and seriousness with which the Corporation has
secured growth and creation of value for its shareholders in the past," said
Louis Audet, President and Chief Executive Officer of Cogeco Cable.

The transaction is subject to usual conditions and to the obtaining of a
further orders of the Superior Court of Québec as part of the implementation
of a plan of arrangement and reorganization of CSII which has already been
approved by the Court. A motion anticipated to be filed later today with the
Court for this purpose will be heard June 15, 2006. The implementation of this
plan and the sale to Cogeco Cable will enable Cabovisao to refocus on its
growth opportunities in the Portuguese market.

Cogeco Cable will finance the acquisition of Cabovisao through an
underwritten credit facility of $900 million over five years committed by
Canadian Imperial Bank of Commerce. CIBC World Markets has acted as financial
advisor in connection with the proposed transaction. The total debt ratio on
Cogeco Cable's consolidated EBITDA(1) following the acquisition of Cabovisao
will be 4.8 compared to 3.1 before this transaction.

Cabovisao - Televisao por Cabo S.A.

This company is a leader in cable telecommunications in its market,
providing analog television, high-speed Internet (HSI) and telephony services
to approximately 611,000 revenue-generating units and 820,000 homes passed in
Portugal. Approximately 264,000 customers subscribe to Cabovisao's analog
television service,130,000 customers subscribe to HSI service and 217,000
subscribe to its telephony service.

Cabovisao's distribution infrastructure is fully integrated and
interconnected by a fibre optic network connecting and servicing all areas of
Portugal. The hybrid fibre optic and two-way 750 MHz coaxial cable network,
built recently over a 10 year period, meets the DOCSIS 1.1 standard and
reaches approximately 20% of all Portuguese households.

Cabovisao's Financial Position

The company's operating revenue was (euro) 129.3 million(2) for the
fiscal year ended December 31, 2005. For first quarter 2006 ended March 31,
2006, revenue totalled (euro) 34.7 million(3), a 12.6% increase compared to
the year-earlier period. Cabovisao's EBITDA for its fiscal year ended December
2005, stood at (euro) 34.5 million(2) and its annualized EBITDA for the first
quarter ended March 31, 2006, was (euro) 43.9 million(3).

Cogeco Cable Inc. will hold a telephone conference to discuss this
investment. Management's comments will be presented while taking into account
the required sensitivity towards the Court on issues raised.

The conference call will be held on June 2, 2006 at 14:00 Eastern
Daylight Saving Time, and will be rebroadcast live on Cogeco's Web site: The webcast will be available until June 7. Members
of the financial community will be able to access the conference call and ask
questions. Media representatives may attend as listeners only.
Please use the following dial-in number to have access to the conference
call by dialing 10 minutes before the start of the conference:

Canada/USA Access Number: 1 800 819-9193
International Access Number: +1 913 981-4911
Confirmation Code: 1483035

A rebroadcast of the conference call will be available until June 7 by

Canada and US access number: 1 888 203-1112
International access number: +1 719 457-0820
Confirmation code: 1483035

Certain statements in this press release may constitute forward-looking
information within the meaning of securities laws. Forward-looking information
may relate to our future outlook and anticipated events, our business, our
operations, our financial performance, our financial condition or our results
and, in some cases, can be identified by terminology such as "will", "should",
"expect", "plan", "guarantee", "secure", "annualized", "potential", "believes"
or other similar expressions concerning matters that are not historical facts.
In particular, statements regarding our future operating results and economic
performance and our objectives and strategies are forward-looking statements.
These statements are based on certain factors and assumptions, including
expected growth, results of operations, performance and business prospects and
opportunities, which we believe are reasonable as of the current date. While
we consider these assumptions to be reasonable based on information currently
available to us, they may prove to be incorrect. Forward-looking information
is also subject to certain factors, including risks and uncertainties
(described in "Uncertainty and main risk factors" of the Corporation's 2005
annual MD&A) that could cause actual results to differ materially from what we
currently expect. These factors include technological changes, changes in
market and competition, governmental or regulatory developments, general
economic conditions, the development of new products and services, the
enhancement of existing products and services, and the introduction of
competing products having technological or other advantages, many of which are
beyond our control. Therefore, future events and results may vary
significantly from what we currently foresee. You should not place undue
importance on forward-looking information and should not rely upon this
information as of any other date. While we may elect to, we are under no
obligation (and expressly disclaim any such obligation) and do not undertake
to update or alter this information before next quarter.
This analysis should be read in conjunction with the Corporation's
financial statements and the notes thereto prepared in accordance with
Canadian GAAP and the MD&A included in the Corporation's Annual Report.
Throughout this discussion, all amounts are in Canadian dollars unless
otherwise indicated.


Cogeco Cable ( is the second largest cable operator in both
Ontario and Québec, and ranks fourth in Canada in terms of the number of basic
cable service customers served. Cogeco Cable invests in state-of-the-art
broadband network facilities, delivers a wide range of services over these
facilities with great speed and reliability at attractive prices, and strives
to provide both superior customer care and growing profitability to satisfy
its customers' varied electronic communication needs. Through its two-way
broadband cable infrastructure, Cogeco Cable provides its residential and
commercial customers with analog and digital video and audio services, high-
speed Internet access as well as digital telephony service. The Corporation
provides about 1,464,000 revenue-generating units to approximately 1,462,000
households in its service territory. Cogeco Cable's subordinate voting shares
are listed on the Toronto Stock Exchange (CCA).

(1) Operating income before amortization or EBITDA is defined as net
income before depreciation and amortization, interest expense, income or
witholding taxes and non-operating items such as restructuring charges.
Operating income before amortization is a standard measure used in the
communications industry to assist in understanding and comparing
operating results and is often referred to by Cogeco Cable's peers and
competitors as EBITDA (earning before interest, taxes, depreciation and
amortization). Cogeco Cable believes this is an important measure as it
allows the Corporation to assess its ongoing business without the impact
of depreciation or amortization expenses as well as non-operating
factors. It is intended to indicate Cogeco Cable's ability to incur or
service debt, invest in capital expenditures or deferred charges and
allows the Corporation to compare to its peers who may have different
capital structures. This measure is not a defined term under Canadian or
Portuguese Generally Accepted Accounting Principles (GAAP).

(2) Audited financial data for Cabovisao - Televisao por Cabo, S.A.
established according to Portuguese GAAP.

(3) Non-audited financial data for Cabovisao - Televisao por Cabo, S.A.
established according to Portuguese GAAP.

Contact Information

  • For further information: Marie Carrier, Director, Corporate
    Communications, (514) 874-2600; Gilles Corriveau, Enigma Communications,
    (514) 982-0308, extension 207; Source: Pierre Gagné, Vice President, Finance
    and Chief Financial Officer, (514) 874-2600