CS&L completes first acquisition since Windstream spin-off a year ago, deal worth $409 million

Communications Sales & Leasing Inc. (CSL) on Monday completed its $409 million acquisition of PEG Bandwidth LLC, a Lewisville, Texas-based operator of dark fiber and cell site backhaul assets for mostly rural telecom carriers and enterprises.

The deal is the first acquisition for CS&L since the Little Rock-based real estate investment trust (REIT) was spun off from Windstream Holdings Inc. just over one year ago. PEG has an extensive fiber network consisting of over 300,000 strand miles in the Northeast/Mid-Atlantic, Illinois and South Central regions of the U.S.

The purchase price for all of PEG’s outstanding equity interest includes $315 million in cash, the issuance of one million shares of the CS&L common stock, and the distribution of 87,500 shares of the telecom trust’s 3% Series A Convertible Preferred Stock. CS&L borrowed $321 million under its revolving credit facility to fund the cash portion of the purchase price and transaction costs, company officials said.

At the end of the first quarter, CS&L also announced that it had entered into a $3 million deal with its former parent to acquire 32 wireless towers owned by Windstream as well as operating rights for 49 wireless towers previously conveyed to the trust in its spin-off from the Little Rock telecom in April of last year.

Once that deal is completed, wireless carriers now leasing access to these towers will become customers of CS&L. Arkansas’ newest publicly-traded concern will also receive rights to construct and operate wireless towers on nearly 1,000 properties currently leased exclusively to Windstream by CS&L.

Company officials said the acquisition is consistent with CS&L’s strategy of owning and constructing mission critical communications infrastructure, and advances the REIT’s goal of expanding its relationships with the largest wireless carriers. The deal, subject to regulatory approval, was expected to be completed in the second quarter.

CS&L is expected to announced its first quarter financial results on May 12. Shares of Arkansas REIT were down 13 cents at $23.10 on the Nasdaq stock exchange prior to Monday’s closing bell.