US regional telco Frontier Communications (NASDAQ:FTR) has agreed a US$1.5bn senior secured term loan to help fund its acquisition of Verizon Communications’ wireline operations in California, Florida and Texas.
Frontier stated that it would draw…
US regional telco Frontier Communications (NASDAQ:FTR) has agreed a US$1.5bn senior secured term loan to help fund its acquisition of Verizon Communications’ wireline operations in California, Florida and Texas.
Frontier stated that it would draw the loan once the US$10.4bn acquisition closes, most likely at the end of March 2016.
In a SEC filing, Frontier said it can elect whether interest rates under the facility are based on either the base rate in the credit agreement or Libor. Interest rate margins, ranging between 0.75% and 1.75% for base rate borrowings and 1.75% and 2.75% for Libor borrowings, will be adjusted according to the company’s total leverage ratio.
JP Morgan was the lead-left bookrunner on the transaction. JP Morgan Securities, Merrill Lynch and Citigroup Global Markets were joint lead arrangers and bookrunners. Bank of America, Citibank, Barclays, Credit Suisse, Deutsche Bank, Mizuho Bank, Morgan Stanley, Royal Bank of Canada and Credit Agricole were co-syndication agents.
In June, the telco completed the equity component with a US$2.75bn dual-tranche offering.
Frontier CFO John Jureller said the new facility provides acquisition financing at “favourable terms and rates”.
“The proceeds will reduce the amount of public high-yield debt to be raised,” he added.
Wells Fargo analyst Jennifer Fritzsche noted that the company will still need to raise US$6.5bn in the high-yield debt market to fully fund the deal.
“Frontier has a bridge loan in place to cover the entire amount but Jureller has been very clear the company will not rely on the bridge loan to close the deal,” she said.
Also in June, Frontier accepted some US$283m in annual support from the FCC’s Connect America Fund to boost its broadband roll-out.
The operator provides broadband, voice, video, wireless internet data access and data security solutions in 28 states.
