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Dobson and Bank of America amend loan to eliminate change in control risk
By Carlise Newman
Chicago, March 31 - Dobson Communications Corp. said Monday that its majority shareholder Dobson CC LP, and Bank of America NA have reached an agreement in principle to amend and restructure of Dobson CC's loan, which had a maturity date of March 31, 2003. Under the agreement, any change in control risk is eliminated.
To allow time for the completion of a definitive legal agreement, Bank of America and Dobson CC have extended the maturity date of the Dobson CC loan to April 21.
On March 5, Dobson released its fourth quarter earnings for 2002 and including outlining the risks within the credit agreement. Dobson CC pledged certain assets, including securities that represent controlling interests in Dobson CC and in Dobson Communications, against the loan.
The report said if the loan was not paid at maturity or if a default occurs under the loan agreements, Dobson could experience a change of control, upon which Dobson and its subsidiary, Dobson/Sygnet Communications Co., would have been required to offer to purchase each of their outstanding senior notes at 101% of the principal amount.
In addition, Dobson Communications would have been required to offer to purchase its outstanding senior preferred stock at 101% of the liquidation preference.
Also, if either failed to complete the purchases of the tendered senior notes, the noteholders would be entitled to accelerate the maturity of the senior notes and if the company failed to purchase its outstanding senior preferred stock, the holders of the stock would be entitled to elect two additional directors to Dobson's board of directors.
Dobson Communications is a provider of wireless phone services headquartered in Oklahoma City.
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