HomeMy WebLinkAbout20161216Notice of Pro Forma Transaction.pdf
Ronald W. Del Sesto, Jr.
Jeffrey R. Strenkowski
Denise S. Wood
ronald.delsesto@morganlewis.com effrey.strenkowski@morganlewis.com denise.wood@morganlewis.com
Morgan, Lewis & Bockius LLP
2020 K Street, NW
Washington, DC 20006-1806 +1.202.373.6000
United States +1.202.373.6001
December 13, 2016
VIA OVERNIGHT DELIVERY AND EMAIL
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington Street
Boise, Idaho 83702
secretary@puc.idaho.gov
Re: Notification Regarding the Proposed Pro Forma Change in Indirect
Ownership of Talk America Services, LLC
Dear Secretary Jewell:
On behalf of Communications Sales & Leasing, Inc. (“CS&L”) and together with Talk
America Services, LLC (“Licensee”) (together with CS&L, the “Parties”), this letter advises
the Commission of the proposed pro forma change in indirect ownership that will result in
a change in the intermediate holding company structure between Licensee and CS&L,
with no change in the ultimate owners of the company (the “Pro Forma Change”). The
Parties understand that Commission approval is not required for the Pro Forma Change.
Accordingly, the Parties submit this letter for informational purposes.
Description of the Parties
CS&L (NASDAQ: CSAL), a Maryland corporation headquartered at 10802 Executive Center
Drive, Benton Building, Suite 300, Little Rock, Arkansas 72211, is a publicly traded real
estate investment trust that engages in the acquisition and construction of infrastructure
in the telecommunications industry. Prior to April 24, 2015, CS&L was a wholly owned
subsidiary of Windstream Services, LLC, a wholly-owned subsidiary of Windstream
Holdings, Inc. (together with its subsidiaries, “Windstream”). On April 24, 2015,
Windstream contributed to CS&L certain telecommunications network assets, in certain
states, including fiber and copper networks and other real estate through a sale-lease
back transaction, and then spun off CS&L to Windstream stockholders. CS&L (and its
subsidiaries) now operates as an independent, publicly-traded company, and leases
telecommunications network assets and property back to Windstream for the operation of
Windstream’s business. CS&L currently owns 4.2 million fiber strand miles, 86 wireless
towers, and other property across dozens of states. Additional information on CS&L can
Jean D. Jewell, Secretary
December 13, 2016
Page 2
be found at: www.cslreit.com/about/.
CS&L does not provide telecommunications services in its own right. It owns and operates
a number of licensed telecommunications providers in all states and the District of
Columbia, except Alaska, California and Hawaii, many of which also hold authority from
the Federal Communications Commission (“FCC”) to provide domestic interstate and
international telecommunications services. In Idaho, CS&L’s regulated subsidiaries hold
the following authorizations:
1. Talk America Services, LLC is authorized to provide resold local exchange and
interexchange telecommunications services pursuant to Certificate No. 519
granted by Order No. 33296 in Case No. TAL-T-14-01 on May 8, 2015.
Exhibit A illustrates the current and post-Pro Forma Change corporate ownership structure
of CS&L’s regulated subsidiaries in Idaho. After the Pro Forma Change is completed, the
Parties will remain well-qualified to provide service to their customers, and their operations
will continue to be overseen by the same well-qualified management team with
substantial telecommunications experience and technical expertise.
Designated Contacts
Inquiries or copies of any correspondence, orders, or other materials pertaining to this
filing should be directed to:
Ronald W. Del Sesto, Jr.
Jeffrey R. Strenkowski
Denise S. Wood
Morgan, Lewis & Bockius LLP
2020 K Street, N.W.
Washington, DC 20006-1806
202-373-6000 (Tel)
202-373-6001 (Fax)
ronald.delsesto@morganlewis.com
jeffrey.strenkowski@morganlewis.com
denise.wood@morganlewis.com
with a copy to:
Daniel Heard,
Executive Vice President – General Counsel
and Secretary
Communications Sales & Leasing, Inc.
10802 Executive Center Drive
Benton Building, Suite 300
Little Rock, AR 72211
501-850-0844 (Tel)
daniel.heard@cslreit.com
Jean D. Jewell, Secretary
December 13, 2016
Page 3
Description of the Pro Forma Change
The proposed Pro Forma Change will involve the insertion of two new entities, “New LP
LLC” and “New OP LP,”1 in the ownership chain between CS&L and its current direct
subsidiaries, CSL Capital, LLC, Uniti Holdings LP and Uniti Holdings GP, LLC (the “Current
Subs”). Upon completion of the Pro Forma Change, New OP, LP will wholly own the
Current Subs. CS&L will be general partner of New OP LP, with a 99% equity interest,
while New LP LLC will be a limited partner of New OP LP, with initially a 1% equity
interest. New LP LLC will be wholly owned by CS&L. Thus, the Pro Forma Change will not
result in any changes to the ultimate ownership of the Licensee, which will remain with
CS&L and its shareholders. Rather, the only change is that the Licensee will have new
intermediary entities added between it and CS&L. After the Pro Forma Change is
undertaken the Licensee will continue to conduct all of its operations as they are currently
conducted.
See Exhibit A for a chart illustrating the pre- and post-Pro Forma Change Corporate
Ownership Structure.
Public Interest Considerations
As a result of the Pro Forma Change, two new entities will be inserted into the ownership
chain between Licensee and CS&L, with no change to the ultimate ownership of the
Licensee. Given that the Pro Forma Change only involves inserting additional entities into
the CS&L corporate structure, it is purely pro forma in nature, it will not result in any new
owners of the Licensee other than those in existence immediately before the Pro Forma
Change takes place, and it will not directly involve the Licensee itself, or its operations.
The net effect of the Pro Forma Change will be simply to add two new entities to the
Licensee’s ownership chain. There will be no change in actual working control of the
Licensee, no change in the membership of its board of directors or in the management of
its operations, and no change in Licensee’s capital structure as a result of the Pro Forma
Change. The Pro Forma Change will not affect employee headcount in the CS&L family of
companies. The proposed change in CS&L’s corporate ownership structure will provide the
company with greater flexibility for future equity and debt transactions, which will
increase its access to capital and benefit the Licensee and its customers. The Licensee will
remain well-qualified to provide service to its customers, and its operations will continue
to be overseen by its existing management team. The telecommunications services
provided by the Licensee and the rates, terms and conditions of those services will not
1 The names and jurisdiction(s) of organization of these entities has not yet been
determined. New LP LLC will be a limited liability company; and New OP LP will be a
limited partnership.
Jean D. Jewell, Secretary
December 13, 2016
Page 4
change as a result of the Pro Forma Change, and the Idaho customers of the Licensee will
not be affected in any way by the Pro Forma Change.
In sum, the Pro Forma Change will improve the company’s access to debt and equity
capital. This, in turn, will enable both the holding company and its operating subsidiaries
to keep their cost of capital low. The Licensee will continue to have the same requisite
managerial, technical and financial capabilities to provide quality communications
services. The Idaho customers of the Licensee will receive the same full range of products
and services that they received prior to the Pro Forma Change at the same prices and
under the same terms and conditions. All of the above facts demonstrate that the Pro
Forma Change is in the public interest.
* * * *
An original and seven (7) copies of this letter are enclosed for filing. Please date-stamp
the extra copy and return it in the envelope provided. Should you have any questions,
please do not hesitate to contact the undersigned.
Respectfully submitted,
___________________________________
Ronald W. Del Sesto, Jr.
Jeffrey R. Strenkowski
Denise S. Wood
Counsel to the Parties
EXHIBIT A
Pre- and Post-Pro Forma Change Corporate Ownership Charts
I
Pre-Pro Forma Transaction Organizational Structure
------------------------. I I : Shareholders ,
'-----------,-----------I
I
I Communications Sales & Leasing, Inc. I
I
I
I Uniti Holdings GP, LLC I CSL Capital, LLC I
(noneconomic \
I Uniti Holdings LP b •••••••.•.••••.•••.••••••••.•.•••••••.••••••••.•.•••••••.••••••••.•.••••••• J 1 general partner) I
99%
LP
Uniti Fiber Uniti Fiber TAS I CSL National, LP
Holdings-TC LLC Holdings, Inc. (Licensee)
I I
Tower Cloud, Inc. I I Uniti Fiber-PEG LLC I CSL Kentucky CSL Georgia
System, LLC System, LLC
I
I I
PEG Bandwidth Licensee [Other PEG Bandwidth Contact
(Ucensee) Operating Companies]
Unless otherwise indicated all ownership percentages are 100%.
Network, LLC
D Licensed in one or more jurisdictions.
D Not licensed in any jurisdiction.
I
CSL National
GP, LLC
1%
GP
I
I
I
CSL Georgia
Realty, LLC
Post-Pro Forma Transaction Organizational Structure
------------------------. I I : Shareholders ,
'-----------,-----------I
I
I Communications Sales & Leasing, Inc. I
I
"New LP LLC" I 99%GP
1%LP I I "New OP LP" I I
I I CSL Capital, LLC I I
I Uniti Holdings GP, LLC I
(noneconomic l
99%
I Uniti Holdings LP
..................... general partner) .... ..1
LP
I I I TAS CSL National, LP
Uniti Fiber Holdings-Uniti Fiber
(Licensee)
TC LLC Holdings, Inc. I I I
CSL Kentucky CSL Georgia
Tower Cloud, Inc. I Uniti Fiber-PEG LLC I System, LLC System, LLC
I I
PEG Bandwidth Licensee [Other PEG Bandwidth Contact
(Licensee) Operating Companies]
Unless otherwise indicated all ownership percentages are 100%.
Network, LLC
D Licensed in one or more jurisdictions.
D Not licensed in any jurisdiction.
I
I
I
CSL National
GP, LLC
1% I GP
I
CSL Georgia
Realty, LLC
Verification
STATE OF ARKANSAS
PULASKI COUNTY
§
§
§
VERIFICATION
I, Daniel Heard, hereby declare that I am Executive Vice President -General Counsel and
Secretary of Communications Sales & Leasing, Inc. (the "Company"); that I am authorized to
make this Verification on behalf of the Company and its subsidiaries; that the foregoing filing
was prepared under my direction and supervision; that I am familiar with the facts set forth in the
foregoing filing; and that, with respect to the Company and its subsidiaries, the contents of that
filing are true and correct to the best of my knowledge, information, and belief.
.,,
Executive Vice President -General Counsel and Secretary
Communications Sales & Leasing, Inc.
10802 Executive Center Drive
Benton Building Suite 300
Little Rock, AR 72211
Subscribed and sworn to me this _g__ day of November, 2016.
SHANNON KARPOFF
Notary Publlc-Arkonsos
Pulaski county
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