Consolidated Communications sets Tuesday launch for $950 million credit facility

By Sara Rosenberg

New York, Dec. 10 - Consolidated Communications Holdings Inc. is scheduled to hold a conference call on Tuesday afternoon to launch its proposed $950 million senior secured credit facility (B1/BB-), according to a market source.

The deal was previously set to launch on Nov. 14, but prior to that launch, it was postponed.

Wachovia is the lead arranger and bookrunner on the deal.

The facility consists of a $760 million seven-year funded term loan, a $140 million seven-year final maturity delayed-draw until May 1, 2008 term loan and a $50 million six-year revolver.

According to previous filings with the Securities and Exchange Commission, the revolver and the two term loans are expected to have pricing of Libor plus 200 basis points, with the revolver carrying a 50 bps unused fee and the delayed-draw term loan carrying a 100 bps unused fee.

There is an accordion feature in the credit agreement that allows for $250 million in incremental term loans.

Financial covenants will include a maximum total net leverage ratio of 5.50 to 1.00 - provided that on the fiscal quarter end occurring immediately after the first anniversary of the closing date, the ratio will step down to 5.25 to 1.00 - and a minimum interest coverage ratio of 2.25 to 1.00.

Proceeds will be used to help fund the acquisition of North Pittsburgh Systems, Inc. for $375.1 million, to provide ongoing working capital and for other general corporate purposes.

The delayed-draw term loan, which is delayed draw until May 1, 2008 and has a seven-year final maturity, will be used for the repurchase or redemption in full of the company's existing 9¾% senior notes due 2012.

North Pittsburgh's shareholders will receive $25.00 per share in cash and stock. The shareholders may elect to exchange each share for either $25.00 in cash or 1.1061947 shares of Consolidated common stock, subject to proration so that 80% of the North Pittsburgh shares will be exchanged for cash and 20% for stock.

Pro forma leverage will be 4.4 times net debt to LTM adjusted EBITDA.

The acquisition is expected to close on Dec. 31.

Consolidated Communications is a Mattoon, Ill.-based rural local exchange company. North Pittsburgh is a Gibsonia, Pa., provider of telecommunication services.

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