OpTel Plans $100 Mln IPO to Fund Cable, Phone, Internet Growth
Washington, June 5 (Bloomberg) -- OpTel Inc. filed for an
initial public offering that could raise as much as $100 million,
before expenses, to fund the cable television provider's
expansion into telecommunications and Internet access.
The Dallas-based company was founded in 1993 to buy up
independent cable TV providers competing with local incumbents.
OpTel customers are residents of apartment buildings, condominium
complexes and mobile-home parks, the company said in its filing
to the U.S. Securities and Exchange Commission.
OpTel now envisions wrapping in local and long-distance
phone and online services, into '' a package of voice, video and
Internet access at competitive prices,'' the IPO filing said.
The company didn't say the number or price of the Class A
common shares it will sell in the IPO. The $100 million estimated
offering value was given only to calculate the SEC filing fee.
OpTel officials couldn't be reached for comment.
The company earmarked the money being raised in the stock
sale to fund telecommunications equipment purchases and expansion
into new markets. Some of the proceeds also may be used to buy
other companies. While the company has no acquisitions in the
works now, it plans to continue making purchases under its growth
program, the filing said.
OpTel said it expects to have its telecommunications
services in place by the end of next year in all it current
markets, which include Houston, Dallas and nearby Fort Worth,
Texas; Los Angeles, San Diego and San Francisco, California;
Orlando, Tampa, Miami and nearby Fort Lauderdale, Florida;
Phoenix, Arizona; Denver; Chicago; and Atlanta.
The filing said that, ''based on industry sources,'' the
company's markets contain about 3 million residences.
So far the push into telecommunications and the related
''substantial up-front operating expenses'' has yielded losses
going back to 1995, the filing said.
Most recently, in the half year ended Feb. 28, the company
recorded a $28.5 million net loss after adjusting to include
results from a unit acquired during the period. In the same six-
month period the previous year, OpTel had a $16.3 million net
loss, according to the filing.
Revenue increased 90 percent to $35.4 million in the recent
half-year period from $18.6 million in the year-ago period, the
filing said.
Still, the company $385 million of debt outstanding as of
April 30, creating potential cash flow problems that could suck
money out of capital spending, the filing acknowledged in its
standard section on risk factors.
''The company's earnings were insufficient to cover its
fixed charges by approximately $51 million for fiscal 1997 and
$35 million for the six month period ended February 28, 1998,''
the filing said.
Canadian Cable TV
OpTel will continue to be controlled by Groupe Videotron
Ltee., a Canadian cable TV and phone service provider, which will
own an undisclosed number of Class B common shares, which get 10
votes each versus one apiece for Class A. Otherwise the two
classes are identical and Class B shares are convertible one-for-
one into Class A, according to the filing.
Montreal-based Groupe Videotron has invested $250 million in
OpTel, according to the filing.
Groupe Videotron President and Chief Operating Officer
Claude Chagnon also is chairman of OpTel. Louis Brunel, who
headed cable TV and telecommunications operations for Groupe
Videotron's recently divested U.K. unit, is president and chief
executive of OpTel, the filing said.
Salomon Smith Barney will underwrite the stock sale, with
Goldman, Sachs & Co., Bear, Stearns & Co., and CIBC Oppenheimer.
OpTel plans to have the shares listed for trading on the Nasdaq
Stock Market under a symbol to be decided later, according to the
company's S-1 registration statement to the SEC.
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