RCN $480 million credit facility to launch Tuesday

By Sara Rosenberg

New York, Nov. 3 - RCN Corp. is scheduled to hold a bank meeting on Tuesday for its proposed $480 million exit financing credit facility, according to a market source. Deutsche Bank is the sole lead arranger and bookrunner on the deal.

The facility consists of a $25 million letter-of-credit facility, a $330 million seven-year term loan B talked at Libor plus 400 basis points, and a $125 million 71/2-year second-lien facility talked at Libor plus 800 basis points.

Originally, the deal was expected to be sized at $460 million with the term loan B sized at $285 million and the second lien sized at $150 million.

But, the company asked the court to increase its facility by $20 million so that it could buy the 50% of Starpower Communications LLC it does not own from Pepco Communications LLC. Pepco Communications is a unit of Pepco Holdings Inc., a Washington, D.C.-based utility.

The Princeton, N.J., broadband company filed a prepackaged Chapter 11 case in the U.S. Bankruptcy Court for the Southern District of New York on May 27 after reaching agreement with its senior secured lenders and an ad hoc committee of holders of its senior notes on a debt restructuring. The confirmation plan for RCN is scheduled for Dec. 8, and the company expects to emerge from bankruptcy on Dec. 31.

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