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FairPoint to launch up to $2.08 billion credit facility to SMAs Friday, retail March 6
By Sara Rosenberg
New York, Feb. 26 - FairPoint Communications Inc. is scheduled to hold a senior managing agent bank meeting on Friday and a retail bank meeting on March 6 to launch its proposed up to $2.08 billion credit facility, according to a market source.
Lehman Brothers, Morgan Stanley, Bank of America, Deutsche Bank, Wachovia, Merrill Lynch and CoBank are the lead banks on the deal, with Lehman the left lead.
The credit facility commitment letter, which was obtained on Jan. 15, 2007, provides for a $200 million six-year revolver with a 37.5 bps unused fee, an up to $200 million one-year delayed-draw, with eight-year final maturity, term loan with a 75 bps unused fee, and an up to $1.68 billion eight-year term loan B, according to filings with the Securities and Exchange Commission.
The commitment letter also provides for certain covenants, including a minimum cash interest coverage ratio of 2.25 to 1.0, and a maximum total leverage ratio to EBITDA of 5.75 to 1.0 in year one and 5.50 to 1.0 thereafter.
Proceeds will be used to help fund the merger with Verizon Communications Inc.'s wireline operations in Maine, New Hampshire and Vermont.
In the merger, FairPoint will issue about 53.8 million of its common shares to be distributed in a tax-free Reverse Morris Trust transaction to the shareholders of Verizon as well as assume roughly $1.7 billion of debt. The transaction will give FairPoint's shareholders 40% ownership and Verizon's shareholders 60% ownership of the combined company.
FairPoint is a Charlotte, N.C., provider of communications services to rural communities.
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