Abovenet Sends Its Investors a $5/share Xmas Gift

November 23rd, 2010 by · 1 Comment

Metro fiber specialist abvt is kicking off the holiday season with a surprise $5/share special dividend, to be paid out on the Saturday after Christmas.  The total amount of the one time dividend will be approximately $129M, which is just about two thirds of the $195M the company has on the balance sheet.  Replacing that cash on the balance sheet and the company’s current credit facility will be a new five year $250M senior secured revolving credit facility.  This would seem to imply that AboveNet is quite happy growing organically at its current rate, with no need for any imminent M&A.

Not that they couldn’t buy something if the price was right, but their free cash flow easily supports their current capex levels and therefore I guess they just don’t see the need to hold that much cash.  So much metro fiber has traded hands this year, but despite the fact that it might have more synergies than others with acquired assets, AboveNet has not participated.  They certainly seem to come down on the build side of the build or buy question.

Given that they have regularly outspent the sector in terms of capex as a percentage of revenue over the past two years, one can hardly suggest they ought to be driving that cash back into their network.  Even still, they must have gotten a very nice rate on that $250M revolver.

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Categories: Financials · Metro fiber

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  • Anonymous says:

    Management has sold a nice amount of their stock at these levels as well as their largest shareholder… certainly nothing going on here in the way of a sale.

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