Knology looking to complement organic growth with M&A activity

By Jennifer Lanning Drey

Portland, Ore., Sept. 9 - Knology, Inc. is focused on achieving organic growth, which the company would like to complement with merger and acquisition activity if the right opportunities emerge, Todd Holt, president of Knology, said during a Tuesday presentation at the Jefferies 6th Annual Communications Conference in New York.

Organic growth is expected to come through further penetration of Knology's network, particularly in the small business community, he said.

At the same time, the company is looking to achieve mid-30% EBITDA margins after breaking past the 30% mark in 2007, Bruce D. Herman, chief financial officer of Knology, said later in the presentation.

Knology's business strategy is to reinvest a portion of its profits into capital expenditures, and the company is now generating a 12% free cash flow margin, thanks to prior network investments, he said.

Knology puts all potential capital expenditures through an extensive process that looks to ensure strategic investments will have an internal rate of return of at least 40%.

Knology ended the second quarter with $38 million of cash and the full $25 million available under its revolving credit facility. The company had $609 million of first-lien debt and no second-lien debt, said Herman, categorizing Knology's balance sheet as strong, particularly given the current economy.

Knology is a West Point, Ga.-based provider of interactive communications and entertainment services.

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