Cequel to Make $440 Mln Payout to Investors including Quadrangle, GS Capital and Oaktree

The Quadrangle Group is getting some good news.

Today, Cequel Communications Holdings I said that it plans to refinance an existing $2.525 billion loan with a new $2.7 billion credit facility. The new loan will consist of a $500 million revolver and a $2.2 billion term loan B. Proceeds will be used to fund a $370 million distribution in March PLUS another payout of $70 million in May, according to the statement.

Moody’s Investors Service says the $70 million will be an “incremental sponsor dividend” that will use a combination of balance sheet cash and revolver borrowings. All of Cequel’s investors–which include Quadrangle, Goldman Sachs Capital Partners, Oaktree Capital  and company management–will get a chunk of the $440 million, one person familiar with the situation said.

“This is a reflection of [Cequel] growing very strongly and they’re generating lots of free cash flow,” the source says.

St. Louis-based Cequel Communications does business as Suddenlink Communications.  The company provides digital TV, high-speed Internet and telephone services to consumers and businesses. It generated revenues of approximately $1.8 billion for the 12 months ended Sept. 30, 2011, Moody’s said.

Moody’s affirmed Cequel’s B1 corporate family rating, probability of default and stable outlook. The refinancing increases Cequel’s leverage by about half a turn to 6X debt-to-EBITDA, Moody’s said.

This would be second payout from Cequel. In 2011, Cequel took part in a dividend recap that it used to fund an acquisition as well as a payout, the source says.

With the two dividends, Quadrangle will have returned nearly all, or 85%, of the money it invested in Cequel, the person says. The investment came from Quadrangle’s second fund, which raised $2 billion in 2005. The pool has an 8.56% IRR since inception, according to March 31, 2011 data from CalSTRS.

Officials for Cequel couldn’t be reached for comment. Oaktree declined comment.