Consolidated Communications to repay debt as part of IPO

By Ted A. Knutson

Washington, Dec. 8 - Consolidated Communications Holdings, Inc. unveiled a projected $400 million initial public offering of common stock, accompanied by a plan to repay all of the company's $118.7 million in term loan A loans and redeem 35% of the $70 million principal amount of its 9¾% senior notes due 2012.

Financing for the scheduled debt retirement includes $90 million from the IPO, $47.7 million in existing corporate cash and $75.7 million out of an increase in Consolidated's term loan C facility for a total of $213.4 million.

The term loan A facility bears interest at Libor plus 250 basis points and matures on April 14, 2010.

On April 14 of this year, Consolidated issued $200 million of the senior notes to finance its acquisition of TXU Communications Ventures Co.

The increase in the term loan C will be part of an amended and restated credit facility, expected to consist of a $389.6 million term loan C due Oct. 14, 2011 (an increase of $75.7 million from the existing term loan C) and a $30 million revolver due April 14, 2010 that is expected to be undrawn at closing.

The term loan C and the revolver are expected to carry an initial interest rate of Libor plus 250 basis points, the IPO filing said. After April 1, 2005, if the facility is still rated at least B1/B+ then pricing on the term loan C would step down by 25 basis points. Revolver pricing could also step down but the adjustment will be based on the company's total net leverage ratio.

The revolver is expected to have a 50 basis points commitment fee.

Credit Suisse First Boston is listed as the sole underwriter for the IPO.

The announcement was made by the Mattoon, Ill.-based telecommunications company in an S-1 registration with the Securities and Exchange Commission.

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