Once again the change in ownership of one of Hawaii’s top utilities will wind up in the hands of the state Public Utilities Commission.

Cincinnati Bell Inc. and Hawaiian Telcom announced Monday that the Ohio telecommunications company is seeking to buy the Honolulu company in a $650 million cash-and-stock deal. The buyout would leave Hawaiian Telcom shareholders owning approximately 15 percent and Cincinnati Bell shareholders owning 85 percent of the combined company.

The sale requires approval from federal and state agencies on top of Hawaiian Telcom’s shareholders. The agencies responsible for approving the sale include the Federal Communications Commission and the Hawaii PUC. If the sale gets the necessary approvals, it is expected to close in the second half of 2018.

Scott Barber, president of Hawaiian Telcom, said the sale of Hawaii’s telecommunications utility is different from the controversial attempted purchase of Hawaiian Electric Co.’s parent company, Hawaiian Electric Industries, by Florida- based NextEra Energy Inc. The PUC rejected NextEra’s $4.3 billion bid to buy HEI in July 2016 after a review that lasted nearly 19 months.

“We’re completely different,” Barber said. “We’re more of a competitive carrier here in Hawaii. HECO is a monopoly.”

Barber said Cincinnati Bell’s purchase of Hawaiian Telcom will give the Hawaii utility the capital it needs to continue expanding its fiber-optic network, which provides high-speed internet and video services. Since 2010, Hawaiian Telcom has been investing in its fiber-optic network, spending roughly $500 million to enable 200,000 homes in Hawaii to receive the services.

“Both of us have telephone lines declining and decided we’re going to invest in fiber,” Barber said. “We would trade notes with one another over the last few years … just to try to learn from each other’s insights. The more we chatted, the more we realized we might be better off just merging together so we can share resources.”

Combined, the companies share fiber networks exceeding 14,000 fiber route miles.

Under terms of the sale, Hawaiian Telcom shareholders would receive about a 26 percent premium to Hawaiian Telcom’s closing price of $24.44 on Friday. Shareholders will have the option to select either $30.75 in cash, 1.6305 shares of Cincinnati Bell common stock or a mix of $18.45 in cash and 0.6522 shares of Cincinnati Bell common stock for each share of Hawaiian Telcom. The total amount is subject to proration so that what is paid to Hawaiian Telcom stockholders will be 60 percent cash and 40 percent Cincinnati Bell common stock.

At the end of the day Monday, Hawaiian Telcom’s stock was up 18.1 percent to $28.87. Cincinnati Bell’s stock was down 7 percent to $18.

PUC awaits filing

If its sale is approved, Hawaiian Telcom would maintain its separate brand and operations and remain locally managed. Existing union agreements would be honored under the new ownership, the companies said. Hawaiian Telcom has 1,300 employees; Cincinnati Bell has 3,000.

It is unclear whether Barber would stay on as president. When asked about his future with Hawaiian Telcom, Barber said, “We haven’t had those discussions.” Barber said he would “certainly” like to stay on and “do what is best for all of the employees and customers.”

Barber said he expected the regulatory review process to take nine to 12 months.

Delmond Won, executive officer of the PUC, said the agency does not know how long the process will take, as the companies have yet to file their application with the PUC.

“We have no idea what the issues are going to be that we’re going to review,” Won said. “We have a standard process for mergers … so we’ll follow the standard process.”

The standard review includes looking into whether the company is fit, willing and able to serve as a utility in the state, Won said.

Barry Sine, analyst for Drexel Hamilton LLC, said he expects regulators to pay special attention to the financial fitness of Cincinnati Bell, as previous acquisitions of the Honolulu-based telecommunications provider resulted in bankruptcy.

After Washington, D.C.-based The Carlyle Group purchased Hawaiian Telcom from Verizon Communications in 2004, the carrier experienced financial difficulty that led to Hawaiian Telcom filing for Chapter 11 bankruptcy in 2008. Hawaiian Telcom came out of bankruptcy in 2010.

During the time of the bankruptcy, the company’s service deteriorated, as it wasn’t investing in its network, Sine said.

Barber said he is not worried about Cincinnati Bell’s financial fitness.

“This makes Hawaiian Telcom a stronger and more sustainable company,” he said. “Our company is safer as part of this acquisition than we were before.”

Cincinnati Bell CEO Leigh Fox said he was flying to Hawaii and would meet with Gov. David Ige to talk about the proposed purchase.

“I’m actually hopping on a flight later this afternoon to go speak with regulators and local government and the governor of Hawaii this week,” Leigh said during a conference call Monday morning. “We’re doing everything we can to put our best foot forward. I don’t foresee a problem. … It’s a process, and we have to go through it.”

Hawaiian Telcom has changed ownership multiple times since it was founded in 1883.

In 1967, Connecticut-based GTE Corp. acquired Hawaiian Telephone and renamed it GTE Hawaiian Tel. After the 2000 merger of GTE with New York-based Bell Atlantic, forming Verizon Communications, GTE Hawaiian Tel became Verizon Hawaii. In 2004, The Carlyle Group purchased Verizon Hawaii from Verizon Communications.

If Hawaiian Telcom backs out of the the deal, it would be required to pay a termination fee of $11.9 million to Cincinnati Bell.