Knology focused on growing business through M&A opportunities with 40% return on investment

By Jennifer Lanning Drey

Portland, Ore., Sept. 6 - Knology Inc. is seeking merger and acquisition opportunities that would be immediately accretive to shareholders and provide a no-less-than 40% return on investment, company chief financial officer Todd Holt said during the Morgan Keegan 2007 Equity Conference held Thursday in Memphis.

"There's a lot of little companies out there that we can get our hands on, we think," Rodger Johnson, Knology's chief executive officer, said during the conference.

Of the return-on-investment target, Holt said, "We take a very disciplined approach to capital deployment."

"Our capital structure is efficient. We want to manage that efficient capital structure, we want to have a balanced leverage ratio."

The executives also believe Knology has opportunities for organic growth in areas including its business-customer base, which currently accounts for about 15% of revenues and is considered to have a more attractive margin structure.

Knology expects to generate pro forma free cash flow of $35 million and plans to continue increasing topline growth in 2007, partially by streamlining selling, general and administrative costs, Holt said.

During the presentation, Holt also discussed the $580 million credit facility that Knology closed in conjunction with its merger with Prairie Wave Communications earlier this year. The facility includes a $25 million revolver that Holt said Knology views as a liquidity cushion but does not intend to use.

Knology is a West Point, Ga., provider of interactive communications and entertainment services in the southeastern United States and South Dakota.

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