Done Deals: Willis Stein Buys Telecom from HIG –

In another private equity move to win market share in the fiber optics infrastructure market, Willis Stein & Partners bought network infrastructure company Orius Corp. from HIG Capital last month in a deal worth $750 million in debt and equity.

Orius will be merged with Willis Stein’s existing telecom services company LISN Inc.

The company was purchased with a 50-50 debt-to-equity ratio. The $375 million debt portion of the deal-$275 million of senior debt and $100 million in senior subordinated debt-was provided under lead financing by DB Alex. Brown. Banc of America Securities .and First Union Corp. were also involved in the financing.

Douglas Berman, managing director at Miami-based HIG Capital said Orius made 13 acquisitions since March 1998 when HIG Capital bought the company.

Orius had 1999 sales of $356 million, ranking close behind the top three publicly-traded companies that specialize in telecommunications infrastructure. HIG Capital will see a cash-on-cash return upwards of seven times the original purchase price of Orius, Berman said.

The deal closed on Dec. 15.

Willis Stein managing director Bob Froetscher said his firm will control about 68% of the newly combined entity, while management of both companies will own the remaining 32% of the company.

Orius specializes in infrastructure services for telecommunications and cable TV companies. LISN provides engineering, furnishing and installation services, primarily to independent telephone companies. The newly combined company will be called Orius.

Of seven Orius seats on its board, Willis Stein will occupy four seats. Bill Mercurio of Orius will head the merged company.

“Telecom is just exploding,” Froetscher said. “Orius serves all these telecom providers that have to build out infrastructure to meet the needs of the New Economy and the Internet.”

Leaping Into the Fray

On a similar note, an investor group led by Banc One Equity Capital and Saunders Karp & Megrue this month announced plans to start a telecom infrastructure platform called Linc.net. (see page 12)

Froetscher said Willis Stein wanted to merge the two companies because together they have a wider breadth of products and services. He said the company has great growth rates and a strong chief executive and management team.

LISN’s customers are primarily in the mid-Atlantic states and the Northeast while Orius serves the Southwest, Rocky Mountains, and further West.

Froetscher said after the merger, Orius will provide infrastructure services in 47 states.

“There is high demand from companies who want to install fiber optic cable, but don’t have the experience in laying it,” Berman said. “There is a shortage in skilled technicians, so companies have to pay premium wages to the workers and charge premium prices to their customers.”

“Orius aims to add ongoing maintenance services, which will serve the increasing number of companies that don’t want to build internal staff to run these operations,” Froetscher said of the company’s growth strategy.

Willis Stein’s telecom portfolio includes a myriad of companies in radio and broadcast and cable television. Its most recent deal was the acquisition of Ziff-Davis Publishing.

Froetscher added that Orius has a letter of intent to buy a small outside plant fiber installation company.

Although HIG Capital is exiting from its infrastructure investment, the firm continues to be bullish on the sector. “We continue to think [telecommunications infrastructure] is a very attractive industry,” Berman said.