US-based rural broadband and satellite TV provider Frontier Communications has priced US$750m of upsized 11-year senior notes to refinance debt.
The 7.625% bond, which was increased by US$250m following strong demand, priced at par. This represents a…
US-based rural broadband and satellite TV provider Frontier Communications has priced US$750m of upsized 11-year senior notes to refinance debt.
The 7.625% bond, which was increased by US$250m following strong demand, priced at par. This represents a 5.65% spread to Benchmark Treasury.
JP Morgan is lead-left while Barclays, BofA Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley and RBS are joint book runners.
Following the upsize, Frontier pledged to buy up to US$225m of its 8.250% senior notes due 2017, in addition to previously announced plans to repurchase a portion of other notes due in March and April of 2015.
The company has around US$1bn of the 2017 notes outstanding, including US$208.8m which it had already agreed to buy in a privately negotiated transaction.
In addition, Frontier has previously announced plans to use proceeds from the new bond, alongside cash on hand, to purchase as much as US$674.8m of its outstanding 7.875% and 6.625% bonds due 2015.
Frontier specialises in offering bundled triple play services to both residential and business customers in rural areas. The company has around four million customers across 27 US states, and provides satellite DTH services via Dish Network and DirecTV.
At the end of 2012, Frontier had approximately US$8.38bn in long-term total debt. It generated US$5bn in revenues last year.
The 2024 notes were rated Ba2 by Moody’s and BB- by S&P.
Moody’s said its rating reflected Frontier’s “strong and predictable” cash flows, and its commitment to de-lever, “demonstrated by its recent dividend reduction and meaningful debt reduction thus far in 2013”.
The ratings agency expects the group will have a leverage of slightly below 4x by the end of the year, despite declining revenues and market share.
“Moody’s projects that Frontier’s leverage will remain in the mid-to-high 3x range into 2014 despite some modest debt reduction unless the company can reverse the decline in revenue and begin to recapture market share,” it said.