Consolidated Communications adds $350 million, refinances debt
Broadband and business communications services provider Consolidated Communications (NASDAQ: CNSL) says it has received $350 million of an expected $425 million in funding from an affiliate of Searchlight Capital Partners, L.P. The company says it also as refinanced its remaining outstanding debt. The newly polished balance sheet will enable the company to further deploy fiber in its networks.
Consolidated announced last month that it would receive funding from Searchlight. The transaction has two parts. In this initial part, Searchlight has invested the $350 million in exchange for 8% of Consolidated’s common stock as well as a contingent payment right that is convertible, upon the receipt of certain regulatory and shareholder approvals, into an additional 16.9% of the Company’s common stock, and the right to receive an unsecured subordinated note with a principal amount of approximately $395.5 million. In the second stage, Searchlight will invest another $75 million and will be issued the note, which will be convertible into shares of perpetual preferred stock of the company with an aggregate liquidation preference equal to the principal amount of the note at that time. This stage is subject to FCC and Hart Scott Rodino approvals and the satisfaction of certain other customary closing conditions; Consolidate expects to receive the FCC approval in the middle of next year.
The company also refinanced its debt. Consolidated and certain of its wholly owned subsidiaries raised $2.25 billion in new secured debt (including a new revolving credit facility) and retired all of its outstanding debt. The new credit agreement consists of a five-year $250 million revolving credit facility and a seven-year term loan in the aggregate amount of $1.25 billion. The term loan extends the company’s maturity date to late 2027 and is priced at a coupon rate of London Interbank Offered Rate (LIBOR) plus 4.75% annually with a 1.0% LIBOR floor. The company also raised $750 million aggregate principal amount of 6.500% senior secured notes due 2028.
“We are confident our new structure and enhanced strategy, combined with a resilient and stable core business, provide us everything we need to complete the transformation of our company,” said Bob Udell, president and CEO at Consolidated Communications. “We are pleased to begin our strategic partnership with Searchlight and bring the most competitive broadband services to the people and communities we serve. We have the right team, attractive markets, a robust near-net fiber network, and now the capital structure to allow us to return to revenue growth. Our next era of fiber expansion, which is already underway, will bring significant benefits to consumer, commercial and carrier customers.”
Consolidated serves rural and metro communities in a 23-state service area. Its fiber network spans 46,000 fiber route miles.
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Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
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