Jones, Bell Canada restructure deal

Jones Intercable’s proposed $ 400 million alliance with Canadian telco Bell Canada Intl. is the latest cable-telco venture sent back to the drawing table because of the FCC’s new rate regulations.

“In spite of regulatory confusion, we are still committed to proceed toward our alliance with BCI,” said Glenn Jones, chairman and CEO, Jones Intercable.

Jones Intercable has 1.3 million subscribers, making it the nation’s eighth-largest cable operator.

Under the deal’s original terms, BCI was to make an initial investment of $ 275 million upon closing of the transaction to buy 10 million shares of Jones Intercable’s Class A Common Stock, representing a 30% stake in the cable company. BCI was also set to commit an additional $ 125 million to finance the growth of the cable operator and maintain BCI’s 30% ownership interest.

Glenn Jones was also to receive $ 55 million for his controlling interest in the company.

Although under the new terms the $ 400 million final figure is unchanged, the structure is different. Now the initial investments will be in two installments: BCI will immediately buy 2.5 million newly issued Class A shares of Jones Intercable stock at $ 22 per share. Next, BCI will purchase at closing at $ 27. 50 per share sufficient Class A shares to acquire the 30% interest, for a total consideration of about $ 261 million. BCI’s growth and maintenance investment has been upped to $ 139 million, while Jones’ selling price has been cut to $ 52 million.

The companies say BCI’s initial purchase will allow both Jones and BCI to implement their strategies before the deal’s completion.

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