US-based rural broadband and satellite TV provider Frontier Communications is seeking to raise US$500m through the issuance of new senior unsecured notes, due 2023.
Credit Suisse and JP Morgan are joint book running managers on the sale with Barclays,…
US-based rural broadband and satellite TV provider Frontier Communications is seeking to raise US$500m through the issuance of new senior unsecured notes, due 2023.
Credit Suisse and JP Morgan are joint book running managers on the sale with Barclays, Citigroup, Deutsche Bank, Morgan Stanley and RBS co-managers.
Frontier said that net proceeds would be used to repay existing debt, specifically the US$522.7m outstanding of 6.250% senior notes due mid-January 2013.
The transaction is part of Frontier’s wider refinancing strategy as seeks to push out the maturities on its circa-US$8.3bn of total debt, the majority of which is in the form of senior notes.
In May 2012, Frontier issued US$500m of 9-year senior unsecured notes, which were used to fund the tender offer for its outstanding 8.25% senior notes due 2014 and 7.875% senior notes due 2015.
Prior to that, the company announced in February that it was reducing its dividend by 47% in order to focus on reducing leverage ratio. Frontier has a long-term leverage target of approximately 2.5 times gross debt-to-EBITDA compared to its current ratio, as of 30 June 2012, of 3.4 times. The dividend reduction is expected to save it US$348m on an annual basis.
According to ratings agency Fitch, which has assigned a BB+ rating to the new debt, Frontier has US$65m of principal payments due in 2012, US$581m in 2013 and US$258m in 2014.
Fitch expects Frontier to repay this through a combination of new debt, free cash flow of between US$360m-US$400m and a portion of its untapped US$750m revolving credit facility.
Frontier specialises in offering bundled triple play services to both residential and business customers in rural areas. The company has approximately 4 million customers in 27 US states and provides satellite DTH services via Dish Network.
