Consolidated Communications Holdings announced that it secured a new incremental term loan facility for its pending acquisition of FairPoint Communications, Inc., an all-stock merger valued at approximately $1.5 billion, including debt, which was announced on Dec. 5, 2016.
The Company previously secured underwritten debt financing for the pending acquisition, that in addition to cash on hand and other sources of liquidity, would be used to repay and redeem certain FairPoint debt and pay fees and expenses associated with both the pending acquisition and related financing. The new incremental term loan facility provides that the Company may incur in a single draw an aggregate principal amount of up to $935 million that would be drawn at closing of the pending acquisition. The terms, conditions and covenants of the new incremental term loan facility are materially consistent with the Company’s existing term loan facility and will be treated as a fungible tack on to the existing facility at closing. The new facility has an interest rate of LIBOR plus 3.00 percent and the greater of (i) a 1.00 percent LIBOR floor and (ii) the three-month adjusted LIBOR rate.
The Company expects to close on the FairPoint acquisition by mid-2017, after obtaining the required regulatory approvals and the approval of both Consolidated Communications’ and FairPoint’s shareholders. Ticking fees will start accruing to lenders providing the incremental term loan commitments on Jan. 15, 2017 equal to the interest rate of the incremental term loan facility. The incremental term loan facility is secured on a pari-passu basis with the existing credit facilities under the Company’s credit agreement.
”Given current capital market conditions as well as the strong receptiveness to the FairPoint acquisition, we were opportunistic on addressing this financing as soon as possible after announcing the acquisition,” said Steve Childers, chief financial officer of Consolidated Communications. "We are extremely pleased with the outcome and we have significantly de-risked our capital structure by going to market now. We greatly appreciate the support of our underwriters and our bank group."
Morgan Stanley Senior Funding, Inc. was the left lead arranger and bookrunner. TD Securities (USA) LLC, MUFG and Mizuho Bank LTD were joint lead arrangers and joint bookrunners.