FiberNet amends loan to waive securities issue, extend amortization, change rate

By Sara Rosenberg

New York, Aug. 23 - FiberNet Telecom Group Inc. amended its credit facility, waiving the requirement that it issue securities, extending the amortization schedule and changing the interest rate, according to a company news release.

The company was previously required to raise net proceeds of at least $6.5 million through a securities issue, which would have been paid to the lenders.

Under the changed amortization schedule, the company now has until August 2006 to repay $3 million under the credit facility, with the balance due in February 2007.

Lastly, the interest rate has been switched to a fixed rate of 8.5%, which will increase by 25 basis points on a quarterly basis beginning Jan. 1, 2006 through maturity.

FiberNet has been permitted to use $1.9 million of restricted cash to reduce its overall debt to $14.2 million from $16.1 million.

Deutsche Bank is the lead bank on the deal.

"We are gratified that our bank group has agreed to these substantial amendments to the credit agreement, which will eliminate the need for FiberNet to issue securities at this time," said Jon A. DeLuca, president and chief executive officer, in the release.

"We recently reported solid second-quarter results, and, as our business continues to improve, our lenders, who are also large shareholders in the company, believe that if we need to access the capital markets, we may be able to do so at a more favorable time for the company."

FiberNet is a New York-based company that deploys, owns and operates fiber-optic networks.

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