Lumen Books Sale of Latin American Business for $2.7 Billion

Lumen Technologies and Stonepeak today announced the signing of a definitive agreement for Lumen to sell its Latin American business to Stonepeak, a leading alternative investment firm, for $2.7 billion.

Under the terms of the purchase agreement, Lumen will divest its Latin American business, which will operate as an independent, U.S. headquartered portfolio company of Stonepeak (the "New LATAM Company"). The current Latin American leadership team and organization will remain in place, led by Hector Alonso, Lumen's president for the region. Lumen will also retain a strategic relationship with the New LATAM Company and continue to serve joint customers in the region.

"This transaction unlocks value for our shareholders while allowing us to maintain our global presence through our strategic relationship with the New LATAM Company," said Lumen President and CEO Jeff Storey. "This transaction allows Lumen to focus investments in key areas of the business to drive future growth while providing flexibility for our capital allocation strategy."

The transaction will accomplish the following for Lumen:

• Monetizes an attractive asset at ~9X the Latin American business' 2020 Estimated Adjusted EBITDA
• Provides additional capital to enable Lumen to accelerate investments in key growth areas
• Enables greater flexibility on capital allocation, allowing for debt reduction and the continued evaluation of share repurchases

"Lumen's Latin American business is a market leader with a strong footprint and exciting potential for expansion," said Brian McMullen, Stonepeak Senior Managing Director. "Stonepeak has been an early and active investor in digital infrastructure globally and we are looking forward to applying our experience and additional capital to Lumen's Latin American business."

A new regional partnership

Lumen will continue to serve customers in North America and the EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific) regions with needs in Latin America through its strategic partnership with the New LATAM Company. This relationship includes reciprocal reselling and network arrangements that leverage each other's extensive fiber footprints, data centers and other network assets. Upon the completion of the transaction, customers who seek services within the Latin America region will work directly with the New LATAM Company or through the strategic Lumen partnership.

"Stonepeak has made it very clear that they are committed to enterprises that operate in Latin America. This transaction provides the New LATAM Company with more autonomy to serve its customers and the enhanced ability to react to and invest in changing market conditions in the Latin America region," said Alonso. "These customers will experience the same world-class network and services they have come to expect from a leadership team focused on their success." 

For Stonepeak, the transaction represents an opportunity to invest in a Latin American communications platform with an extensive subsea, terrestrial fiber and data center footprint across the region, including several of its large metro markets. As with its other communications platforms, Stonepeak plans to invest heavily behind Alonso and the New LATAM Company management team.

"We look forward to partnering with Hector and his team to expand the network across the entire region and position the platform for continued long-term growth," said Andrew Thomas, Stonepeak Managing Director.

Lumen and Stonepeak expect the transaction to close in the first half of 2022, upon receipt of all regulatory approvals in the U.S. and certain countries where the New LATAM Company operates, as well as the satisfaction of other customary conditions.

AustralianSuper, Australia's largest pension fund, is investing alongside Stonepeak in the transaction.

The purchase agreement contains various customary covenants for transactions of this type, including various indemnities and purchase price adjustments. BofA Securities, Morgan Stanley & Co. LLC, Citi, and Goldman Sachs are acting as financial advisors to Lumen in connection with the transaction.

Jones Walker LLP is serving as legal advisor.

[Editor's note: This is a lightly edited press release.]