Cincinnati Bell gets consents from holders of 7¼% 2013 notes, executes supplemental indenture

By Paul Deckelman

New York, Jan. 31 - Cincinnati Bell Inc. said it had received the required number of consents from the holders of a majority of the outstanding principal amount of its 7¼% senior notes due 2013 to proposed indenture amendments and has executed a supplemental indenture incorporating the desired changes.

As previously announced, Cincinnati Bell, a Cincinnati-based provider of local telephone exchange and wireless communications services in Ohio, Kentucky and Indiana, said on Jan. 12 that it had begun soliciting consents to proposed indenture changes from the holders of the 7¼% notes. It set an initial expiration deadline of 5 p.m. ET on Jan. 21, although this was subsequently extended.

The company said the primary purpose of the solicitation would be to facilitate its two-stage refinancing plan, which Cincinnati Bell expects will significantly reduce interest expense and increase cash flow if and when it is fully implemented.

Cincinnati Bell initially said that in the first stage, which would take place promptly after completion of the consent solicitation, it would refinance its existing senior secured credit facility using the proceeds from the issuance of $350 million of new senior unsecured notes and with borrowings under a new senior secured revolving credit facility. The company later said it would issue both senior unsecured and senior subordinated notes as part of this financing.

In the second stage, the company will redeem all its 16% senior subordinated discount notes due 2009 using a combination of cash from operations and new senior debt, which may include senior secured debt in whole or in part. Cincinnati Bell expects to complete the second stage of the refinancing plan in the first quarter of 2006. The company noted that the 16% notes may be called at a fixed price at any time on or after March 26, 2006.

The company said that its consent solicitation would be conditioned on the receipt of consents from holders of at least a majority of the outstanding principal amount of the 7¼% notes, and other customary conditions.

It initially said it would pay a consent fee of $12.50 per $1,000 principal amount of notes for which consents properly were delivered by the expiration deadline and not subsequently revoked, although this was later increased.

On Jan. 24, Cincinnati Bell announced the extension of its consent solicitation to 5 p.m. ET on Jan. 25 from the original Jan. 21 expiration. The deadline was again extended on Jan. 26 to 5 p.m. ET on Jan. 28, subject to possible further extension. The company also said it was amending the offer, to increase the consent payment to $17.50 per $1,000 principal amount of notes for which a consent was delivered and to replace the proposed indenture amendment aimed at revising the restricted payments formula with an exception specifically limited for repurchases of the company's 16% senior subordinated discount notes due 2009.

Further, the company said that its previously contemplated issuance of $350 million of senior unsecured notes would be replaced with a financing of up to $250 million of new senior unsecured notes and at least $100 million of new senior subordinated unsecured notes.

Cincinnati Bell said that based on its informal discussions with certain holders, it believed the revised terms of the solicitation would be acceptable to holders of a majority of the notes.

Banc of America Securities LLC (call 888 292-0070 or call collect at 704 388-4813) and Credit Suisse First Boston LLC (call 800 820-1653 or call collect at 212 538-0652) were the solicitation agents. Citigate Financial Intelligence was the information agent (call 877 746-3583 or call collect at 201 499-3500), and The Bank of New York was tabulation agent for the consent solicitation.

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