Consolidated Communications credit facility to include $140 million delayed-draw loan

By Sara Rosenberg

New York, July 6 - Consolidated Communications Holdings Inc.'s proposed senior secured credit facility will include a $140 million delayed-draw term loan, which brings the total deal size to $950 million, according to an 8-K filed with the Securities and Exchange Commission Friday.

As was previously reported, the credit facility also includes a $50 million six-year revolver and a $760 million funded seven-year term loan.

The revolver and the two term loans are expected to carry pricing of Libor plus 200 basis points, the filing said.

The revolver has a 50 bps unused fee and the delayed-draw term loan has a 100 bps unused fee.

Wachovia is the lead arranger and bookrunner on the deal.

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 company said.

The acquisition is expected to close either in the fourth quarter of 2007 or first quarter of 2008, subject to certain customary conditions, including approvals from federal and state regulators and North Pittsburgh's shareholders. It is not subject to financing.

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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