Prairie Wave looking for senior debt financing to buy assets from McLeodUSA

By Sara Rosenberg

New York, May 15 - McLeodUSA Inc. entered into a definitive agreement to sell certain assets to Prairie Wave Communications Inc. for approximately $88 million. The transaction is subject to approval and certain other closing conditions including Prairie Wave's receipt of senior debt financing, a McLeodUSA press release said. Commitment letters have already been received for the debt, according to a Prairie Wave spokesman. Closing on the deal is expected to occur in the third quarter of 2002.

The assets being sold include McLeodUSA's non-core ILEC operations in South Dakota and certain overbuild CLEC and cable television operations in South Dakota, southwestern Minnesota and northwestern Iowa.

McLeodUSA has also initiated the sale of Illinois Consolidated Telephone Co. as part of its recapitalization plan. The transaction is expected to close by the end of 2002. The first $225 million of proceeds will be used to pay down the company's term A and B loans, according to a company press release, reducing debt to about $715 million in bank borrowings. In addition, interest expense will be reduced to about $50 million from $365 million after the ICTC sale closes.

"In the second quarter, McLeodUSA expects to continue to lay the groundwork for profitable future growth by completing the alignment of the sales force and network assets consistent with the results of its central office profitability study in its 25 states," the company's release said. "The Company also plans to continue to focus on cost reductions and improved margins, as well as develop and implement the systems enhancements required to support the improved business processes."

McLeodUSA, a Cedar Rapids, Iowa provider of integrated communications services, expects total revenues of approximately $1.3 billion and EBIDTA, excluding reorganization charges, of $135 million for 2002, according to the release.

Prairie Wave Communications, Inc. is a newly established company formed by an investor group headed by Alta Communications and Bank of America Capital Investors.

© 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.