NTELOS Holdings Corp. (NASDAQ: NTLS), which provides wireless and wireline communications services in seven Mid-Atlantic states under the NTELOS brand, has taken another step towards spinning out its wireline business as a separate company. NTELOS says it has entered into a $370 million post-separation credit facility for Lumos Networks Operating Co., a wholly owned subsidiary of the new Lumos Networks Corp. (expected NASDAQ listing: LMOS). Funding under the new credit facility will occur upon consummation of the separation.
The credit facility will consist of a $60 million senior secured five year revolving credit facility, $30 million of which is expected to be drawn upon funding; a $110 million senior secured five-year amortizing Term Loan A; and a $200 million senior secured six-year amortizing Term Loan B. The proceeds of the credit facility will be initially made available to Lumos Networks on the date of the separation and will be used to fund a working capital cash reserve at Lumos Networks and to pay approximately $315 million to NTELOS to pay off intercompany debt owed to NTELOS as of the separation date and to fund a $283 million mandatory repayment on NTELOS Inc.'s credit facility that is required to reduce NTELOS's consolidated indebtedness to the extent necessary to complete the separation.
Pricing of the Lumos Networks credit facility as of the initial funding will be LIBOR plus 3.25% for the revolver and the Term Loan A and LIBOR plus 3.50% for the Term Loan B. Other terms of the credit facility are described in Lumos Networks Corp.'s Form 10 Registration Statement on file with the SEC.
NTELOS's CEO, James A. Hyde, stated, "Arranging for this Lumos Networks financing represents a significant achievement in our progress toward consummating the separation of our wireline business. We are especially pleased to have arranged for this reasonably priced credit facility in light of the volatile capital markets conditions the nation has been experiencing."
