EarthLink to use cash to deleverage, buy shares, pay dividends

By Lisa Kerner

Charlotte, N.C., Oct. 10 - EarthLink, Inc. is generating "a lot of cash" while maintaining a low debt profile, chief financial officer Brad Ferguson said during a presentation at the Deutsche Bank 20th Annual Leveraged Finance Conference on Wednesday.

For the second quarter, the company had gross debt of $625 million and cash of $258 million. Net debt to EBITDA was 1.3 times at the end of the second quarter.

Uses of cash include debt repayment, share repurchases and dividend payments, said Ferguson. He also mentioned small tuck-in deals, company enhancements, such as collocation, and being opportunistic with the flexibility the cash offers.

In the fourth quarter of 2011, EarthLink took advantage of early debt redemption, redeeming $256 million of convertible notes.

The next call date for bonds is April 2013.

EarthLink's next significant debt maturity is in 2016 when $325 million of 10½% senior secured notes are due.

Since 2007, EarthLink has repurchased 28.5 million shares and has $94 million remaining on its share purchase authorization.

Ferguson said the company spends about $20 million, or a little over 3% yield, on dividend payments.

The Atlanta-based internet access and communications services provider expects full-year capital expenditures to be between $115 million and $125 million.

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