Cincinnati Bell plans $1.1 billion credit facilities for acquisitions

By Sara Rosenberg

New York, July 10 – Cincinnati Bell Inc. received a commitment for $1.1 billion of senior secured credit facilities to help fund its acquisitions of Hawaiian Telcom Inc. and OnX Enterprise Solutions and refinance debt at Cincinnati Bell and Hawaiian Telcom, according to an 8-K filed with the Securities and Exchange Commission on Monday.

Morgan Stanley Senior Funding Inc. is the lead bank on the deal.

The facilities consist of a $150 million five-year revolver and a $950 million seven-year term loan B.

As committed, the revolver and term loan are expected to be priced at Libor plus 350 basis points, with the term loan having a 1% Libor floor. The revolver is anticipated to have a 50 bps upfront fee and the term loan is anticipated to be issued at an original issue discount of 99.5.

The term loan is expected to have 101 soft call protection for six months.

Cincinnati Bell’s net leverage is expected to remain in line with current levels, including run-rate synergies.

Under the agreement with Hawaiian Telcom, Cincinnati Bell is buying the company for about $650 million. Hawaiian Telcom shareholders will have the option to elect either $30.75 in cash, 1.6305 shares of Cincinnati Bell common stock, or a mix of $18.45 in cash and 0.6522 shares of Cincinnati Bell common stock for each share of Hawaiian Telcom, subject to proration such that the aggregate consideration to be paid to Hawaiian Telcom shareholders will be 60% cash and 40% Cincinnati Bell common stock.

As for OnX, Cincinnati Bell agreed to purchase the company for around $201 million in cash on a cash-free, debt-free basis.

The Hawaiian Telcom transaction is expected to close in the second half of 2018 and the OnX transaction will close in the beginning of the fourth quarter 2017. Both transactions are subject to regulatory approvals and other customary conditions.

Cincinnati Bell is a Cincinnati, Ohio-based provider of integrated communications solutions. Hawaiian Telcom is a Honolulu-based providing of integrated communications, broadband, data center and entertainment solutions. OnX is a Toronto-based technology service and solution provider.

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