GCI Holdings expects to bring a new $250 million credit facility to market

By Sara Rosenberg

New York, July 23 - GCI Holdings Inc. is hoping to launch a new $250 million credit facility via a conference call in the near future, according to Bruce Broquet, vice president of finance. Credit Lyonnais is the lead bank on the deal.

The loan is expected to consist of a $50 million five-year pro rata portion with a $25 million greenshoe and a $200 million seven-year term loan B, Broquet said. "I'm hopeful that we'll find enough banks interested to upsize our pro rata to $75 million," he added.

Spreads on the loan are still being solidified. The company's existing facility, which is due on July 31, 2005, has an interest rate of Libor plus 100 basis points. The new loan is anticipated to have a higher interest rate, according to Broquet. However, the company is refinancing the loan because otherwise capex spending would have to be adjusted, limiting the company's growth, Broquet explained.

Besides refinancing existing debt, proceeds will also be used for general corporate purposes.

Security for the loan is basically all assets.

The company previously tried to obtain a $300 million credit facility via Credit Lyonnais. A bank meeting for the $300 million loan was held on June 21. GCI "put it on hold because of the announcement that WorldCom may file for bankruptcy," Broquet said. The company "though it was prudent to pull back and wait for the market to settle down," since WorldCom was GCI's largest single shareholder and customer, he added.

"People needed to get comfortable," Broquet said. "The economy in Alaska has done very well. There's plenty of security and quite a bit of value there."

GCI was waiting for WorldCom to file for Chapter 11, which happened Sunday, and for Moody's Investors Service to release a rating report, which happened Monday, before launching a new deal, Broquet explained.

Moody's rates GCI's proposed bank loan at Ba3 and lowered the rating on the existing $133 million credit facility to Ba3 from Ba2. The downgrade of the bank loan rating reflects the view that with declining long-distance asset value, secured debtholders no longer have the same level of asset coverage that was previously incorporated in the rating, Moody's said. Ratings are supported by stability and defensibility of the company's cable business within Alaska and by dominant market share in the long distance business.

GCI is an Anchorage, Alaska provider of voice, video and data communication services to residential, commercial and government customers.

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