LONDON - Digital 9 Infrastructure PLC (LSE:DGI9) has entered into a definitive agreement to divest its subsea fibre business Aqua Comms to EXA Infrastructure, a portfolio company managed by I Squared Capital, for net proceeds of approximately $48 million. The transaction is subject to regulatory approvals and is expected to conclude within 12 months.
The sale price reflects a 28% discount to Aqua Comms' $75 million valuation as of June 30, 2024, and a 36% discount post-transaction costs, equating to approximately 2.6p per share. This marks a substantial decrease from the $283 million valuation reported on December 31, 2023, attributed to various factors including the inability to fund growth projects in Asia and ongoing price compression in the global subsea fibre market.
The divestiture, advised by Goldman Sachs International, follows the recent sale of EMIC-1 and is part of Digital 9 Infrastructure's managed wind-down strategy. The Board has been advised that a delayed sale is unlikely to improve the price and carries considerable uncertainty. The decision to sell was made after a nine-month auction process.
The equity value of the combined subsea business, including EMIC-1, would represent a 21% discount to the June 30, 2024, valuation pre-transaction costs and 28% post-transaction costs. The proceeds from the sale of Aqua Comms, along with those from EMIC-1, will be used to repay any outstanding balance on the company's Revolving Credit Facility (RCF), with any excess funds returned to shareholders.
Eric Sanderson, Chairman of Digital 9 Infrastructure, acknowledged the disappointment in the sale price but expressed confidence that the transaction represents the best option for shareholders given the current market conditions and specific business challenges faced by Aqua Comms.
The divestment is part of the company's broader strategy to realize assets in an orderly manner, with InfraRed Capital Partners (WA:CPAP) independently validating the transaction terms as fair value post-divestment of EMIC-1. The Board is also exploring options with RCF lenders to extend the remaining balance of the RCF beyond its March 2025 maturity date.
This news is based on a press release statement from Digital 9 Infrastructure PLC.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.