ITC^DeltaCom restructures $260M debt, receives $20M new financing
March 30, 2005 West Point, GA -- ITC^DeltaCom, a provider of integrated communications services in the southeastern United States, today announced that it has completed a restructuring of its existing $260 million of secured indebtedness, to enhance its liquidity through the deferral of scheduled amortization, and that it has obtained a new $20 million subordinated secured term loan from its majority stockholder, Welsh, Carson, Anderson & Stowe (WCAS). The company has drawn down the full amount of the new loan and will use the net loan proceeds for general corporate purposes.
Under the terms of the company's secured indebtedness following the restructuring:
* Total principal payments of $41 million previously due before June 30, 2006, the maturity date of the company's senior credit facility, have been deferred until June 30, 2006.
* All $22 million of obligations under the company's capital leases have been replaced with loans in the same amount under the senior credit facility.
* The first scheduled principal payment under the company's $55.7 million junior credit facility has been deferred from September 30, 2006 to September 30, 2007, and the maturity date of this facility has been extended by one year from June 30, 2008 to June 30, 2009.
* The new $20 million subordinated secured loan will mature after the senior and junior credit facilities are repaid in full and bear payment-in-kind (PIK) interest of 12% per annum.
* Up to $30 million of asset sale proceeds may be retained by the company for general corporate purposes rather than required to prepay credit facility borrowings.
* Interest rates payable on the outstanding senior and junior credit facilities will generally be increased by 2.5% annually.
* Financial covenants in both senior and junior credit facilities have been adjusted to provide the company with significantly more operational flexibility.
"This restructuring provides the liquidity and flexibility needed to successfully operate our business while we explore additional opportunities to deliver on our growth strategy," remarks Randall E. Curran, ITC^DeltaCom's CEO.
In connection with the new $20 million subordinated secured loan, the company also issued WCAS 10-year warrants to purchase 20 million shares of the company's common stock, which will be exercisable following the company's distribution of an information statement to its stockholders under SEC rules. The warrant exercise price of $0.60 per share is equal to the volume-weighted average trading price of the company's common stock, as quoted on the Nasdaq National Market for the 10 consecutive trading days before the restructuring closing.
"This additional investment in ITC^DeltaCom reflects our confidence in the company's new management team, and ITC^DeltaCom's growth prospects," notes Thomas E. McInerney, the company's chairman and a general partner of WCAS.
Miller Buckfire Ying & Co. LLC acted as the company's financial advisor in connection with the restructuring.
Additional information about the transactions will be set forth in the company's annual report on Form 10-K, which will be filed with the SEC on March 31, 2005.