Consolidated Communications to launch $935 million term B on Monday

By Sara Rosenberg

New York, Dec. 9 – Consolidated Communications Inc. scheduled a lenders’ presentation for 1:30 p.m. ET on Monday to launch its $935 million incremental senior secured term loan B, according to a market source.

Morgan Stanley Senior Funding Inc., MUFG, TD Securities (USA) LLC and Mizuho Bank Ltd. are the lead banks on the deal.

In the commitment letter, pricing on the incremental term loan was outlined as Libor plus 350 basis points with a 1% Libor floor and an original issue discount of 99.

The commitment letter also said that the incremental term loan has a springing maturity of March 31, 2022 if Consolidated Communications’ 6˝% senior notes due 2022 are not repaid by that date.

The new loan is being obtained in connection with the acquisition of FairPoint Communications Inc., under which FairPoint shareholders will receive a fixed exchange ratio of 0.73 share of Consolidated Communications common stock for each share of FairPoint common stock. The all-stock merger transaction is valued at about $1.5 billion, including debt.

Proceeds from the incremental term loan B and cash on hand or other sources of liquidity will be used to refinance FairPoint debt and pay fees and expenses associated with the transaction.

As of Sept. 30, FairPoint had net debt of around $887 million.

Pro forma for the transaction, the combined net debt of the combined company will be about $2.3 billion, which represents 3.8 times net leverage as of Sept. 30, compared to Consolidated Communications’ 4.4 times net leverage as of Sept. 30.

After closing, Consolidated Communications’ shareholders will own about 71.3% of the pro forma combined company and FairPoint’s shareholders will own 28.7%.

On a pro forma basis, the combined company generated more than $1.5 billion of revenue and $566 million of adjusted EBITDA before synergies, or $621 million after synergies, for the 12 months ended Sept. 30.

Closing is expected by mid-2017, subject to federal and state regulatory approvals, the approval of both companies’ shareholders and other customary conditions.

Consolidated Communications is a Mattoon, Ill.-based broadband and business communications provider. FairPoint is a Charlotte, N.C.-based provider of data, voice and video technologies.

© 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.