Rural US telco Frontier Communications has closed its US$750m common stock offer and US$1.75bn mandatory convertible preferred stock offer.
The US$750m offering, which had a par value of US$0.25 per share, priced at US$5.00 per share, the telco said in…
Rural US telco Frontier Communications has closed its US$750m common stock offer and US$1.75bn mandatory convertible preferred stock offer.
The US$750m offering, which had a par value of US$0.25 per share, priced at US$5.00 per share, the telco said in a statement. The US$1.75bn of 11.125% mandatory convertible preferred stock priced at US$100.00 per share.
The underwriters have a 30-day option to buy up to 15 million additional shares of common stock and up to 1.75 million extra shares of mandatory convertible preferred stock, at the public offering price in both cases.
Frontier plans to use the proceeds to finance part of the cash consideration for its US$10.54bn acquisition of Verizon Communications’ wireline operations in California, Florida and Texas. The purchase is expected to close in the first half of 2016.
Frontier CFO John Jureller was cited saying in February that the company would finance the deal by raising up to US$3bn in equity during the second or third quarter, and up to US$7.9bn in junk bonds and leveraged loans during the third or fourth quarter.
The joint bookrunning managers for the offerings were JP Morgan, BofA Merrill Lynch and Citigroup Global Markets. The co-managers were Barclays Capital, Credit Suisse Securities, Morgan Stanley,Mizuho Securities, Deutsche Bank Securities, Goldman Sachs and UBS Securities.
The three lead banks provided an 18-month bridge loan covering the entire price of the acquisition, announced on 5 February.
Frontier reported earnings of US$0.02 per share for Q1 2015, about half the consensus estimate of analysts polled by Reuters. Revenues for the period totalled US$1.371bn, up from US$1.154bn in Q1 last year but below analysts’ expectations. The telco, which focuses on rural and small communities, has since received six analyst upgrades, most recently from Gabelli & Co, Raymond James and DA Davidson.
Frontier provides broadband, voice and video services, wireless internet data access and data security for residents and small businesses and more advanced communications for larger businesses in 28 US states.
