Founded in 2004, UniTek Global Services is a communications solutions firm, providing end-to-end solutions to its clients in the wireless, satellite and cable, transportation, education, government, high-occupancy buildings, entertainment and hospitality sectors. Unitek Global counts Comcast, AT&T, and Verizon among its customers.The Company operates in two segments, Fulfillment, and Engineering and Construction.
UniTek has expanded to 2,500 full-time employees, from around 1,700 in 2016. The company also uses around 1,000 additional workers through contractors.
The acquisition represents UniTek’s fourth strategic acquisition under entities managed by Littlejohn & Co., LLC, and New Mountain Finance Corporation (NYSE: NMFC). Prior acquisitions include:
- GW Communications, LLC, completed in June 2017: established a platform for UniTek’s rapidly growing market in engineering, construction, installation and maintenance services for broadband fiber and wireless technologies; and
- Graycliff Enterprises, Inc. and affiliate Hutchins Telecom, completed in August 2018: bolstered UniTek’s presence in the fiber E&C market across the Carolinas, Georgia, Kentucky, Tennessee and Arizona, and expanded its fiber, cable construction, wireless technology & utility locates capabilities.
- According to CEO,UniTek's expansion puts it among the ten largest players in satellite, cable, and home-automation installations in what is still a largely fragmented industry.
CEO Rocky Romanella told investors and the SEC that his company had agreed to a "comprehensive debt restructuring" that would leave buyout-fund investors and creditors with large ownership positions in the firm. The investors included Littlejohn & Co., New Mountain Capital (whose advisory board members include former Tyco CEO Edward Breen, who is also a Comcast board member, though this isn't noted on Breen's current New Mountain profile), and others represented by Apollo Investment Corp. (an affiliate of Apollo Global Management, whose bosses include Sixers owner Josh Harris). The biggest UniTek customer is DirecTV.
BDC Credit Reporter View
There has been at least one BDC lender to the Company since 2007. However, the current group of BDC lenders began to be associated with the Company in 2011, before its bankruptcy and reorganization. (See Corporate Highlights). Following the restructuring and re-positioning of Unitek, the same BDC funds invested $120mn at cost in senior and subordinated debt, as well as preferred and common stock. NMFC has a controlling interest in the Company, and lists the Company in its own filings as a "significant unconsolidated subsidiary". As a result, we have summary income statement results from the Company through June 2018, which show growing sales and $1.7mn of Operating Income. All debt has been valued by the various BDCs involved at par since the reorganization, while the preferred and common have been sharply marked up through June 2018 BDC disclosures. With the latest acquisition the Company seems to be continuing on a growth path, which may result in further write-ups of the junior capital, benefiting Oxford Square (OXSQ) and Main Street Capital (MAIN) but mostly NMFC, which has committed over $60mn. Apollo Investment (AINV) has a major stake, but only in the debt. Total BDC exposure now over $140mn. However, both the senior term debt (L + 850bps) and the subordinated, which is PIK-ed at 15.0% expires in 2019. That might result in refinancing at lower rates, reducing BDC income.
Updated: October 22, 2018