Southeastern Asset Management Calls on CenturyLink to Sell Assets
By Michael Dabaie
Southeastern Asset Management on Tuesday called on CenturyLink Inc. (CTL) to improve its balance sheet through asset sales.
"Southeastern believes that the company's fiber assets are extremely undervalued in the stock market, especially considering the metrics which entities such as infrastructure funds and cable companies have paid in recent private transactions for fiber assets. Therefore Southeastern intends to talk to such infrastructure funds, to cable companies, and to any other verticals who are heavy users of fiber networks but may want to own such networks or parts of them," Memphis-based Southeastern said in a Securities and Exchange Commission filing. The company said it has a 6.2% stake in CenturyLink.
CenturyLink earlier this month cut its annual dividend to $1 from $2.16. The company also pledged to lower its leverage target and accelerate its time frame to achieve it.
Southeastern said the dividend cut wasn't the best way to address balance-sheet concerns, and it will seek to add directors with financial expertise.
"In light of such private market interest, we believe the preferred way to improve the balance sheet should be through asset sales," the firm said.
If assets sales are more likely in the intermediate term than the short-term, Southeastern said it believes separate target stocks should be considered for the fiber network business and consumer business.
"While we disagree with Southeastern's criticism of our recently announced capital allocation policy, we are engaged in discussions with Southeastern regarding their suggested director nominees" CenturyLink said in response to Southeastern.
"CenturyLink continually takes a broad-minded review of its asset portfolio to assess the best ways to enhance value for all shareholders," the company said.
CenturyLink shares were up about 1.5%, to $13.94, early.
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February 19, 2019 09:49 ET (14:49 GMT)Copyright (c) 2019 Dow Jones & Company, Inc.