HickoryTech Corporation, doing business as Enventis, announced today the closing of its debt refinancing agreement for an aggregate credit facility of $165 million. The amended credit facility offers HickoryTech access to extended financing through 2019 to deploy capital in pursuit of its strategic growth initiatives.
Participants of the new credit facilities include: CoBank ACB as administrative agent, lead arranger, bookrunner and a lender; Union Bank, N.A. as co-syndication agent and lender; Sun Trust Bank, N.A. as co-syndication agent and lender, Associated Bank, N.A. as lender and four Farm Credit System Institutions as lenders.
The debt refinancing is in the form of an amendment to the company’s existing agreements. It includes the issuance of $135.3 million in secured term loans and a $30 million secured revolving credit facility, which has no outstanding debt or usage at this time. The term loans are structured in a Term Loan B facility, and are combined in the same credit agreement with the revolving credit facility.
Borrowings under the new credit agreement will bear interest at the company's election based on LIBOR or a base rate plus an applicable margin related to the company's leverage ratio. At the company’s current leverage ratio, the applicable margin will be 2.75 percent for LIBOR loans and there is no LIBOR floor amount.
The company is required to make quarterly amortization payments of $338,000 on the Term Loan B facility. The company has $135.3 million outstanding debt on October 30, 2013. All amounts outstanding on the revolving loan facility and Term Loan B facility will be due on Dec. 31, 2019.
The credit facility is secured by substantially all HickoryTech assets. It includes financial covenants which require HickoryTech to maintain a leverage ratio of less than 3.5 to 1.0, with gradual declines in this ratio after 2014, and a debt service coverage ratio of greater than 2.5 to 1.0.
HickoryTech is a leading regional business and broadband communications provider with an extensive fiber network. The company has grown through strategic acquisitions, including CP Telecom in 2009 and IdeaOne in 2012, as well as organic fiber network expansion including the recent completion of its Greater Minnesota Broadband Collaborative Project.