McLeodUSA amends loan, changing leverage, minimum revenue covenants

By Sara Rosenberg

New York, Oct. 22 - McLeodUSA Inc. amended its credit facility, modifying the total debt to trailing four quarter EBITDA leverage ratio and the trailing four quarter minimum revenue covenants, and revising capital expenditure limits.

The leverage ratio was amended to 13 for the third quarter of 2003, then 15, 13.5, 13.5 and 11 in successive quarters ending at 8.5 in the fourth quarter of 2004.

The minimum revenue covenant was amended to $850 million, $850 million, $875 million, $900 million and $950 million starting in the fourth quarter of 2003 through the fourth quarter of 2004.

A downward revision to the capital expenditure limits was included in the amendment, with the limit now set at $100 million for 2003, $100 million for 2004 and $200 million for 2005.

McLeodUSA sought the amendment due to slower than forecasted growth in revenue from the competitive telecommunications business which led to lower than forecasted EBITDA, according to a news release.

The company has met all current financial covenants and continues to have full access to the $110 million exit financing credit facility and drew $40 million in the month of October.

In return for the amendment, the company paid approximately $5.3 million in fees to the lender group.

McLeodUSA is a Cedar Rapids, Iowa provider of integrated communications services.

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