By Anirban Sen

NEW YORK Wildcat Capital Management LLC, which manages the wealth of buyout firm TPG Inc's co-founder David Bonderman, has asked Consolidated Communications Holdings Inc to reject an offer to take the company private for $2.9 billion including debt.

A non-binding $4-per-share all-cash offer for the broadband services provider undervalues it by 3.5 times, Wildcat wrote to Consolidated Communications' board in a July 12 letter that was reviewed by Reuters.

Wildcat said it owned 3 million Consolidated Communications shares, equivalent to about a 2.6% stake.

The offer was made on April 12 by a consortium led by private equity firm Searchlight Capital, which owns 34% of Consolidated Communications.

Consolidated Communications formed a special committee to consider the offer later that month but has not provided an update since. A company spokesperson did not immediately respond to a request for comment on Wildcat's letter.

The offer represented a 45% premium over Consolidated Communications' closing price for the previous day and was equivalent to 8.4 times the company's projected 2023 earnings before interest, taxes, depreciation and amortization.

TD Cowen analysts wrote in an April 13 note they expected Consolidated Communications to accept the deal given its capital needs and operational challenges. The proposed valuation was "good" compared to how the shares of "other copper fixer-uppers" were trading or have been acquired, they said.

But Wildcat argues that any deal should not be for less than $14 per share because the value of Consolidated Communications' investment in its business has yet to be realized. It said the Mattoon, Illinois-based company should be valued on its assets rather than its current cash flow.

"In our opinion, this is the worst time for (the company) to contemplate a strategic transaction, as its EBITDA and free cash flow are temporarily depressed as a result of the massive capital expenditures being incurred in connection with the fiber upgrades, while the incremental revenues and EBITDA from the fiber build have yet to be realized," Tom McConnon, head of Wildcat's public equities arm, wrote in the letter.

Wildcat added that Apollo Global Management Inc's $7.5 billion acquisition last year of telecoms firm Lumen Technologies Inc's operations in 20 states support its valuation estimates, adjusting for Consolidated Communications' investment in its infrastructure and cost advantage.

"We are not activist investors but have concluded, somewhat reluctantly, that at this juncture it is in the best interests of all shareholders for us to also make our views publicly known," McConnon said in the letter.

This is not Wildcat's first stab at shareholder activism. In 2016, Wildcat called on biotechnology company Sorrento Therapeutics Inc to drop a financing deal and replace its chief executive. When its calls were not heeded, Wildcat sued Sorrento alleging breaches of fiduciary duty and requested access to its records.

The two sides settled their dispute in 2017.

(Reporting by Anirban Sen in New York; Editing by Greg Roumeliotis and Edwina Gibbs)