Acquisitions and Disposition

12 Months Ended

Dec. 31, 2019

Pending Acquisition

On October 9, 2019, Leo Cable and Liberty Latin America entered into a stock purchase agreement with certain subsidiaries of AT&T Inc. (AT&T) to acquire AT&T’s wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands (the AT&T

Acquisition) in an all-cash transaction. The AT&T Acquisition companies provide consumer mobile and B2B services in Puerto Rico and the U.S. Virgin Islands, excluding DirecTV customers. The AT&T Acquisition is valued at an enterprise value of $1,950 million on a cash- and debt-free basis, subject to certain adjustments. We intend to finance this acquisition, including related fees and expenses, through a combination of net proceeds from the 2027 LPR Senior Secured Notes and the 2026 SPV Credit Facility, each as defined and further discussed in note 10, and available liquidity.

The transaction is subject to customary closing conditions, including reviews by the United States FCC and the Department of Justice. We currently expect the transaction to close in the second quarter of 2020.

AT&T will provide ongoing support to the AT&T Acquisition companies under a transition services agreement (the AT&T TSA) for a period up to 36 months following the closing date of the acquisition. Services under the AT&T TSA include, but are not limited to, (i) wireless core, (ii) technology development, (iii) global technology operations, (iv) wireless engineering, (v) network infrastructure, (vi) supply chain and (vii) finance and sales operations. We may terminate any services under the AT&T TSA upon sixty business days’ notice to AT&T in accordance with the terms and conditions of the AT&T TSA.

2019 Acquisition

UTS. Effective March 31, 2019, we completed the acquisition of an 87.5% interest in United Telecommunication Services N.V. (UTS) for a cash purchase price of $162 million, subject to certain potential post-closing adjustments, based on an enterprise value of $189 million (the UTS Acquisition). During the third quarter of 2019, we increased our ownership interest in UTS from 87.5% to 100%, as further described in note 13. UTS provides fixed and mobile services to the island nations of Curaçao, St. Maarten, St. Martin, Bonaire, St. Barths, St. Eustatius and Saba. The UTS Acquisition was funded through a $170 million draw on the C&W Revolving Credit Facility. For further information on the draw of the C&W Revolving Credit Facility, see note 10.

We have accounted for the UTS Acquisition as a business combination using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets of UTS based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. The preliminary opening balance sheet is subject to adjustment based on our final assessment of the fair values of the acquired identifiable assets and liabilities. The valuation process remains open and our opening balance sheet will change as we finalize our valuation. The items with the highest likelihood to change upon finalization of the valuation process include property and equipment, goodwill, intangible assets and deferred taxes. A summary of the purchase price and preliminary opening balance sheet of UTS at the effective March 31, 2019 acquisition date is presented in the following table (in millions):



Cash	$	0.9
Trade receivables	14.9
Other current assets	7.9
Property and equipment	157.2
Goodwill (a)	37.1
Intangible assets subject to amortization	20.1
Long-term deferred tax assets	5.1
Other assets	13.2
Accounts payable	(30.3		)
Other accrued and current liabilities	(28.8		)
Other long-term liabilities	(23.6		)
Noncontrolling interest (b)	(11.6		)
Total purchase price (c)	$	162.1


(a)	The goodwill recognized in connection with the UTS Acquisition is primarily attributable to (i) the ability to take advantage of UTS’s existing broadband communications and mobile networks to gain immediate access to potential customers, and (ii) synergies that are expected to be achieved through the integration of UTS with C&W’s existing business in Curacao.


(b)	Amount represents the estimated aggregate fair value of the noncontrolling interest in UTS as of March 31, 2019.


(c)	Excludes $3 million of direct acquisition costs, including $1 million incurred during 2018. Direct acquisition costs are included in impairment, restructuring and other operating items, net, in our consolidated statements of operations.

Our consolidated statement of operations for the year ended December 31, 2019 includes revenue of $96 million and net earnings of $4 million attributable to UTS.

2019 Disposition

During the fourth quarter of 2019, we disposed of our operations in the Seychelles (the Seychelles Disposition) at an enterprise value of $104 million. As a result of the Seychelles Disposition, we received $78 million of net cash inflows and recorded a loss on disposition of $3 million.

2018 Acquisition

Cabletica. On February 12, 2018, we entered into a definitive agreement to acquire certain assets and liabilities related to Televisora de Costa Rica S.A.’s (Televisora) cable operations in Costa Rica (Cabletica) based on an enterprise value of $252 million, subject to certain customary adjustments. As part of the agreement, the owners of Televisora retained a 20% ownership interest in Cabletica. On October 1, 2018, we completed the acquisition of our 80% interest (the Cabletica Acquisition) for an effective purchase price of $226 million, after working capital adjustments and deducting the value of Televisora’s retained equity interest. The Cabletica Acquisition was financed through a combination of debt and existing cash.

We have accounted for the Cabletica Acquisition as a business combination using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets of Cabletica based on assessments of their respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill. A summary of the purchase price and opening balance sheet of Cabletica at the October 1, 2018 acquisition date is presented in the following table. The opening balance sheet presented below reflects our final purchase price allocation (in millions):



Other current assets	$	6.3
Property and equipment	65.8
Goodwill (a)	159.6
Intangible assets subject to amortization (b)	52.7
Other assets	0.1
Other accrued and current liabilities	(17.7		)
Non-current deferred tax liabilities	(14.6		)
Other long-term liabilities	(0.7		)
Noncontrolling interest (c)	(25.1		)
Total purchase price (d)	$	226.4


(a)	The goodwill recognized in connection with the Cabletica Acquisition is primarily attributable to the ability to take advantage of Cabletica’s existing advanced broadband communications network as a base on which to expand our footprint in the region, and to gain immediate access to potential customers.


(b)	Amount primarily includes intangible assets related to customer relationships. As of October 1, 2018, the weighted average useful life of Cabletica’s intangible assets was approximately eleven years.


(c)	Amount represents the fair value of Televisora’s interest in Cabletica as of the October 1, 2018 acquisition date.


(d)	Excludes $5 million of direct acquisition costs, including $3 million incurred during 2018.

2017 Acquisition

Carve-out Entities. In connection with the acquisition of C&W during 2016 (the C&W Acquisition ), and C&W’s acquisition of Columbus International Inc. and its subsidiaries (collectively, Columbus) in 2015 (the Columbus Acquisition), certain entities (the Carve-out Entities) that hold licenses granted by the FCC were transferred to entities not controlled by C&W (collectively, New Cayman).The arrangements with respect to the Carve-out Entities, which were executed in connection with the Columbus

Acquisition and the C&W Acquisition, contemplated that upon receipt of regulatory approval, we would acquire the Carve-out Entities. On March 8, 2017, the FCC granted its approval for our acquisition of the Carve-out Entities. Accordingly, on April 1, 2017, subsidiaries of C&W acquired the Carve-out Entities (the C&W Carve-out Acquisition) for an aggregate purchase price of $86 million, which represents the amount due under notes receivable that were exchanged for the equity of the Carve-out Entities.