Hawaiian Telcom gets commitment for $320 million delayed-draw loan

By Angela McDaniels

Tacoma, Wash., Feb. 27 – Hawaiian Telcom Holdco, Inc. subsidiary Hawaiian Telcom Communications, Inc. entered into a credit agreement on Friday that provides commitments for a $320 million delayed-draw term loan A and a $30 million five-year revolving loan, according to an 8-K filing with the Securities and Exchange Commission.

The term loan A consists of a $90 million term loan A-1 commitment and a $230 million term loan A-2 commitment.

CoBank, ACB is the administrative agent, an issuing lender, a joint lead arranger, bookrunner and swingline lender. Fifth Third Bank and MUFG Union Bank, NA are joint lead arrangers and co-syndication agents.

The credit agreement has an incremental term loan option that allows the borrower to increase the aggregate loan commitment by up to an additional $100 million, letters of credit of up to $5 million and a swingline facility of up to $5 million.

The borrower can draw on the term A loans in a single advance between May 4 (with an option to close earlier) and May 31.

The term loan A-1 will have a five-year tenor, and the term loan A-2 will have a six-year tenor.

The term A loans bear interest at Libor plus a margin. If the company’s total debt to consolidated EBITDA ratio is less than 2.25 times, then the margin is 350 basis points for the term loan A-1 and 375 bps for the term loan A-2. If the leverage ratio is greater than or equal to 2.25 times, then the margin is 375 bps for the term loan A-1 and 400 bps for the term loan A-2.

Principal amounts outstanding on the term loan A-1 are due and payable in amounts equal to 5% per year payable in equal quarterly installments beginning at the close of the first full fiscal quarter following the closing date.

Principal amounts outstanding on the term loan A-2 are due and payable in amounts equal to 2.5% per year for the first eight full fiscal quarters following the closing date and 5% per year for each fiscal quarter thereafter.

All obligations under the credit agreement will be guaranteed by the parent company and the borrower’s material subsidiaries and will be secured by a first-priority lien.

The credit agreement includes financial covenants, including certain limitations on capital expenditures in excess of $105 million per fiscal year, maintaining a leverage ratio that does not exceed 3.25 to 1.00, which decreases over time, and maintaining a minimum consolidated debt service coverage ratio of 2.75 to 1.00.

The credit agreement permits the company to pay a dividend or redeem its capital stock in an aggregate amount not to exceed $3 million in calendar year 2017 and the greater of $7 million and 50% of cash available for dividends in calendar year 2018 and thereafter.

Hawaiian Telcom is a Honolulu-based provider of integrated communications services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.