FairPoint Communications to get new $690 million credit facility with IPO

By Sara Rosenberg

New York, Dec. 16 - FairPoint Communications Inc. plans to get a new $690 million senior secured credit facility concurrently with its proposed initial public offering of common stock, according to an S-1/A filed with the Securities and Exchange Commission Thursday. Deutsche Bank will be the administrative agent on the deal.

The facility is expected to consist of a $100 million revolver due 2011, which is expected to be undrawn at closing, and a $590 million term loan due 2012.

Proceeds from the term loan and the IPO will be used to repay all $185.1 million of existing outstanding bank debt, fund tender offers and consent solicitations for notes, repurchase all series A preferred stock for $130.8 million, repay all $13.6 million of its subsidiaries' outstanding long-term debt and repay the $7 million unsecured promissory note issued in connection with a past acquisition.

The tender offers will be made for the $115.2 million 9½% senior subordinated notes due 2008, $75 million floating-rate callable securities due 2008, $193 million 12½% senior subordinated notes due 2010 and $225 million 11 7/8% senior notes due 2010.

Revolver borrowings will be available for working capital and general corporate needs, including financing permitted acquisitions.

The IPO - which will be for up to $575 million - is contingent on successful completion of the new credit facility.

Earlier this year, FairPoint was expected to do an Income Deposit Securities offering and in connection with that offering, the company planned on getting a $500 million credit facility also via Deutsche, consisting of a $100 million revolver with an interest rate of Libor plus 325 basis points and a $400 million term loan with an interest rate of Libor plus 350 basis points.

However, in November, the company opted to postpone its IDS offering and, with this latest SEC filing, has evidently decided to just sell stock and rework its related financing proposals.

FairPoint Communications is a Charlotte, N.C., rural local-exchange carrier.

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