GTA’s Acquisition By AP TeleGuam Holdings – What Does It Mean?

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Guam – Below are a list of questions and answers provided by GTA regarding its acquisition by AP TeleGuam Holdings from Shamrock Capital Advisors.

General and Financial

1. What is Advantage Partners/ AP Funds?

Advantage Partners, LLP (“Advantage Partners”) is a leading service provider to private equity funds investing in global markets mainly in Japan. Founded in 1992, the firm services several funds (“AP Funds”) with total capital commitment exceeding USD $4.6 billion ( JPY 380 billion), with approximately two-thirds of which are funded by international investors.

The firm has executed investments in approximately 30 companies to date and has achieved the highest level of returns in the Japanese market. In order to achieve this, Advantage Partners places great importance on supporting operational improvement and strategic planning, based upon extensive management consulting experience.  

Companies in AP Funds’ portfolio include both private and publicly traded firms in various market segments including:  IT/communications/software development, finance/services, consumer products/manufacturing, and distribution/retail.

2. Why did AP Funds invest in GTA TeleGuam?

GTA TeleGuam is a well-run company.  Its record of achievements and success since privatization plus the growth prospects from the military buildup and economic rise in Asia attracted AP Funds to the company and Guam.

Japan will play an important role in the buildup. Advantage Partners is based in Tokyo and has competitive advantages and a track record in value adding to the AP funds portfolio companies in IT and communication industries among others.

3. Why did Shamrock Capital Advisors sell its interest in GTA TeleGuam now, when Guam is poised for super-growth?  

Approximately six years ago, Shamrock worked with GovGuam to privatize GTA.  This was an important undertaking and the employees of GTA TeleGuam have worked hard in the innovative telecom marketplace on Guam.  This has resulted in exciting new services such as digital TV and the iPhone and lower prices overall for telecom customers on Guam.  Many of the goals that Shamrock set out to achieve in partnership with the employees of Guam have been accomplished.   

Now GTA TeleGuam is entering a new growth phase with the economic rise in Asia and pending military buildup.  This is a natural transition time for Shamrock and a typical investment period for its investments.

4. Who are the principal owners of GTA TeleGuam?  What will they exit the investment?

A fund managed by Shamrock Capital Advisors is the principal owner of GTA TeleGuam.  GTA TeleGuam and Shamrock are private companies and they are not publicly disclosing the details of the investment.

5. How and when did negotiations begin between the two companies?

GTA TeleGuam does not disclose terms of a private equity transaction.  Suffice it to say, the two equity investment firms came together and agreed on mutually beneficial terms for a transaction after thorough due-diligence.

6. What is AP Funds acquiring in this deal?

AP Funds are acquiring full ownership interest in GTA TeleGuam.  This includes all assets as well as all employees and the executive management team.

7. What other communications or technology firms receive financial backing from AP Funds?

Advantage Partners is a diversified private equity firm servicing AP Funds which own interest in various industries and market segments including:  IT/communications/software development, finance/services, consumer products/manufacturing, and distribution/retail.   

A partial list of the types of businesses that receive financial backing from AP Funds is available at http://www.advantagepartners.com/en/work/category.html  

8. What are the terms of this transaction?

GTA TeleGuam did not disclose terms of the private equity transaction.

9. What is the value of this transaction to both companies?

This transaction is consistent with the funds strategies for both AP Funds and Shamrock.   

AP Funds see growth opportunities in Guam and was attracted to GTA TeleGuam by the company and its employees’ track record of achievements and success after privatization.  It has new ideas on how to expand communications services in Guam.   

Shamrock chose to exit its investment in the company and return capital to investors.

10. When do you expect to complete the transaction?

The transaction will close after securing all customary government and regulatory approvals.

11. What approvals are necessary to complete this transaction?

The boards of directors of both equity firms have already approved the private equity transaction.  GTA TeleGuam now will seek approvals from the Federal Communications Commission and the Guam Public Utilities Commission.

12. What other companies bid or expressed interest in GTA TeleGuam?

As a privately held company, GTA TeleGuam does not comment on interest from other companies.

13. Was a merger with another communications company an option?

As a privately held company, GTA TeleGuam does not comment on interest from other companies.

14. What influence or bearing did the local dispute over Broadband Stimulus funding have on this transaction?

This transaction and GTA TeleGuam’s objection to stimulus funding for Guam are unrelated and completely independent of each other.   

GTA objected to stimulus funding for Guam because it would tilt the competitive landscape on the island in favor of one company and it would hurt consumers and businesses on Guam in the longer term.

This transaction is good for Guam because it preserves the competitive telecom environment, rather than reduce the number of competitors.  Fair competition leads to overall better services, competitive rates and more innovation.

15. What will happen to the existing board of directors?

Existing board members will serve until the transaction closes.  The new board of directors will be determined after the transaction closes.

16. How big is GTA TeleGuam in terms of revenue, customers, and employees?

As a privately held company, GTA TeleGuam does not comment on this information.

17. What banking and legal firms advised GTA TeleGuam?

Barclays Capital provided financial advice to GTA TeleGuam.  Hughes Hubbard & Reed LLP and others provided legal counsel.

18. Who advised AP Funds?

Deutsche Bank provided financial advice to AP Funds.  Nagashima Ohno & Tsunematsu and Kirkland & Ellis International LLP provided legal advice and KPMG provided accounting and tax advices to AP Funds.

Operations

1. Will GTA TeleGuam continue to be based in Guam?

Yes, GTA TeleGuam will continue to be locally managed by its employees and executive management team.

2. What will happen to the GTA TeleGuam name and brands?

GTA TeleGuam intends to retain its name and brands.  GTA TeleGuam has a new financial backer; everything else is business as usual.

3. What will happen to the company’s management team and employees?

AP Funds intend to retain all employees and executive operations team.

Remember, Advantage Partners is a service provider to private equity funds not an operating company.  They will expect GTA TeleGuam’s management team and employees to execute plans and achieve desired goals.

4. Who will lead and oversee day-to-day operations at GTA TeleGuam after this deal is finalized?

Dan Moffat will continue to lead and oversee day-to-day operations as president and CEO of GTA TeleGuam.  Other members of the executive team will remain in their current roles.   

GTA TeleGuam has a strong and continuing commitment to local employment.  Since privatization, local executives and employees have proven themselves more than capable of successfully running GTA TeleGuam.

5. How will this sale affect GTA TeleGaum’s sales and marketing plans for the rest of this year and beyond?

It will be business as usual.  We have exciting new TV and wireless offerings we plan to introduce soon.

Certainly, the new financial backer will have ideas for maximizing growth opportunities in Guam.  GTA TeleGuam will assess initiatives as part of its overall business strategy, build plans, make decisions, and move on.

6. How will the company 2011 operations plans change due to this deal?

Again, it is business as usual.  AP Funds invested in GTA TeleGuam partly because of the company’s record of achievements and success since privatization.  Going forward, the company will review market opportunities and operating strategies with its investors, solicit their guidance, make decisions, and move on.

7. Do GTA TeleGuam’s new investors have aspirations to expand operations outside of Guam?

GTA TeleGuam will assess expansion opportunities on a case-by-case basis.  We will make prudent decisions for maximizing value for the company and investors.

Employees

1. What will happen to my job and pay?

This transaction should have no effect on employees’ jobs, their pay, and the company’s existing organization structure.  Employees will continue to come to work, interface with each other, customers and suppliers as before and receive their regular pay and benefits.  AP Funds intend to retain all employees and the executive operations team after this transaction is completed.

2. What will happen to my benefits?

GTA TeleGuam does not plan to make changes to any of compensation and benefits program, as a result of this transaction.  Of course, GTA TeleGuam will continually make changes to pay, health and welfare benefits programs to be able to attract and retain the best employees.

3. Will any employees be forced to move?

No.  GTA TeleGuam will continue to be based in Guam and locally managed.

4. What will happen to our stock options?

Vested stock options will become exercisable when the transaction closes. More details on the value of the options and timing of the exercise will be available shortly.

5. How will our work environment change?

It will be business as usual with the same employees and executive operations team.  GTA TeleGuam will continue looking for ways to maintain the company as a great place to work.  

6. Will they bring in new people to replace us?

One of the reasons for Advantage’s interest in GTA TeleGuam is its employees.  Advantage does not own any other communications assets or companies in Guam and will depend on GTA TeleGuam employees for its future success.  It’s up to us as a company to attract, motivate and retain the best people.

7. Do I have to sign a new contract or re-apply for my job?

There are no plans to reassign employees or ask anyone to re-apply for their jobs, as a result of this transaction.  GTA TeleGuam is an “at will” employer and does not have employment contracts with employees, except certain executive positions.   

As always, when new positions open or there are vacancies, the company may choose to reassign staff or allow employees to apply for these positions.   
8. Do I get to stay in my apprenticeship program?

Yes.  It is business as usual.   

9. Does this mean I get to purchase my (company) truck?

No.  All vehicles, furniture, equipment and tools remain the property of GTA TeleGuam.  From time to time, the company may decide to sell certain assets.  In these cases, the company will give consideration to selling certain items to employees.

10. What can I tell customers about Advantage Partners?

You can tell anyone that AP Funds are GTA TeleGuam new principal investor, pending completion of its investment after regulatory approvals.

11. When will they take over and what changes will I see?

Ownership change will occur when the deal closes after pending government and regulatory approvals.  This transaction is good for all stakeholders, including customers, employees, investors and the island.  We expect to continue operations with business and usual before and after the transaction closes.

13. How will we be kept informed about the progress of this transaction?

Management will keep all employees, customers and key suppliers informed on developments through direct communications.

14. Who can I speak with if I have additional questions?

Supervisors and managers are the primary source of information for employees.  If they don’t have the answers to your question, they will know who to go to for additional guidance.  We encourage all employees to ask questions that will help them be more effective in their day-to-day dealing with customers, suppliers and vendors.

Customers

1. How will this transaction affect my service with the company?

This transaction will be transparent to customers and will have no affect on existing services.  Going forward, GTA TeleGuam expects AP Funds to provide new investments and fresh ideas on how to expand the communications services that the company provides to its customers in Guam.   


2. Will my service rates change as a result of this deal?

GTA TeleGuam has no plans for changing service rates as a result of this transaction.   

From a competitive point of view, this transaction bodes well for all consumers and businesses in Guam because it preserves the competitive telecom environment on the island by not reducing the number of competitors, which is typical in mergers and acquisitions.

Over the past six years, consumers and businesses in Guam have benefited from increased competition and innovation. Overall service levels have improved, rates have steadily declined, and carriers have more quickly introduced innovative new products and services such as smartphones and 100 percent digital television based on IP technology.

3. What will happen to the GTA teams that I am used to working with?

You will be interacting with the same friendly employees who are there to make it easy for you to do business with us.

4. How will GTA TeleGuam’s capital and operating expense budget plans change under its new financial backers?

We expect our new financial backer to provide new investments and fresh ideas on how to expand and improve communications services in Guam.  GTA TeleGuam will develop and cost-justify plans to successfully grow the company.  This is no different than before.

Vendors/Suppliers

1. What will happen to the agreement we have in place with GTA TeleGuam now?

GTA TeleGuam will continue to honor all agreements it has with its suppliers and vendors.  Maintaining good relationships with all vendors and suppliers is important for GTA TeleGuam to fulfill its service obligations to customers and support for employees.