Consolidated Communications to leave debt in place with buyout

By Sara Rosenberg

New York, Oct. 16 – Consolidated Communications Holdings Inc. plans to keep its existing capital structure in place following its acquisition by Searchlight Capital Partners LP and British Columbia Investment Management Corp., according to an 8-K filed with the Securities and Exchange Commission on Monday.

For the transaction, Searchlight and British Columbia provided $370 million of equity financing commitments.

Under the agreement, Searchlight and British Columbia will purchase all of the Consolidated Communications common stock not already owned by Searchlight for $4.70 per share in cash. The transaction has an enterprise value of about $3.1 billion, including the assumption of debt.

In connection with execution of the agreement, Consolidated Communications amended its credit agreement, increasing the maximum consolidated first-lien leverage ratio to 7.75x through Dec. 31, 2024, 7.5x from Jan. 1, 2025 through March 31, 2025, 7.25x from April 1, 2025 through June 30, 2025, 7x from July 1, 2025 through Sept. 30, 2025, 6.75x from Oct. 1, 2025 through Dec. 31, 2025, 6.5x from Jan. 1, 2026 through March 31, 2026, 6.25x from April 1, 2026 through June 30, 2026, 6x from July 1, 2026 through Sept. 30, 2026, and 5.85x thereafter.

Prior to the amendment, the leverage ratio covenant was 6.35x until June 30, 2025 and 5.85x thereafter.

While the increase in the leverage ratio covenant is in effect, the company will be subject to additional restrictions on its ability to make certain investments and restricted payments.

The leverage ratio covenant will revert to its original levels on the earlier of the company’s election and Aug. 1, 2025 to the extent $300 million in cash proceeds have not been received by the company from equity contributed to its capital by that date.

The amendment was completed on Oct. 15.

Wells Fargo Bank is the administrative agent on the credit agreement.

Closing on the buyout is expected by the first quarter of 2025, subject to customary conditions, including receipt of regulatory approvals and shareholder approval.

Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as lead financial advisers to Searchlight. Morgan Stanley & Co. LLC, Wells Fargo, Mizuho, RBC Capital Markets and TD Securities are also acting as financial advisers to Searchlight.

Consolidated Communications is a Mattoon, Ill.-based broadband and business communications provider.

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