FairPoint Communications to launch $690 million credit facility Jan. 18

By Sara Rosenberg

New York, Jan. 11 - FairPoint Communications Inc. has scheduled a bank meeting for Jan. 18 to launch its proposed $690 million senior secured credit facility, according to a market source.

Deutsche Bank and Bank of America are the lead banks on the deal, with Deutsche acting as left lead.

As was previously reported, the facility consists of a $100 million revolving credit facility due 2011, which is expected to be undrawn at closing, and a $590 million term loan due 2012.

The company is getting the facility in connection with its proposed initial public offering of common stock.

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 permitted acquisitions.

The IPO is contingent on successful completion of the new credit facility.

Last year, FairPoint was expected to do an Income Deposit Securities offering and, in connection with that offering, the company planned to get a $500 million credit facility 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, the company opted to cancel its IDS offering and instead sell stock and rework its related financing proposals.

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

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