Otelco's credit facility pricing reaches Libor plus 400 bps in connection with term loan add-on

By Angela McDaniels

Tacoma, Wash., Oct. 21 - Otelco Inc. said that the interest rate on its recently amended senior credit facility is Libor plus 350 to 425 basis points, depending on leverage.

The rate was Libor plus 400 bps as of Monday, according to an 8-K filing with the Securities and Exchange Commission. The company announced the amendment of the facility in a press release on Monday and gave further details in the 8-K filing, which was filed later that night.

Prior to the amendment, interest was Libor plus 150 to 250 bps, depending on leverage.

The facility was expanded to $188.5 million in order to fund the acquisition of three Country Road Communications LLC subsidiaries.

The amendment will increase the term loan by $108.85 million to $173.5 million from $64.65 million, with funding conditioned on the closure of the Country Road acquisition. The facility will continue to include a $15 million revolving loan commitment.

The credit facility requires consolidated EBITDA be at least $50 million and caps the consolidated senior leverage ratio at 3.5 to 1 and the consolidated total leverage ratio at 5.54 to 1.

GE Capital Markets, Inc. and CoBank, ACB were the lead arrangers, and General Electric Capital Corp. is the agent for the lenders, according to the news release. CoBank, Raymond James Bank, CIBC Inc., Union Bank of California and Webster Bank were the other participating financial institutions.

The amended credit agreement will terminate on Dec. 31 if all of the conditions to funding have not been met. The company expects to complete the acquisition shortly.

Otelco is an Oneonta, Ala., provider of wireline telephone services in Alabama, Maine and Missouri.

Country Road is a provider of advanced telecommunications services based in Morristown, N.J. Otelco is acquiring its Pine Tree Holdings, Inc., Granby Holdings, Inc. and War Holdings, Inc. subsidiaries, which have operations in Maine, Massachusetts and West Virginia, respectively.

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