Rural LEC Acquisition files to sell $190 million income securities, notes

New York, May 11 - Rural LEC Acquisition LLC plans to sell $190 million of Income Deposit Securities and senior subordinated notes due 2019, according to an S-1 filing with the Securities and Exchange Commission.

Each IDS will be made up of class A common stock and senior subordinated notes due 2019. After 45 days the securities can be separated into their components.

CIBC World Markets and RBC Capital Markets are joint bookrunners for the planned offering.

Rural LEC, an Oneonta, Ala., provider of telephone services in Alabama and Missouri, plans to change its name to Otelco Inc. before the offering closes.

Proceeds from the sale will be used to repay the company's existing long-term notes and for general corporate purposes. Some of the securities will be sold by Rural LEC's existing equity investors.

Rural LEC's existing debt is made up of $81.2 million principal amount of long-term notes payable at Libor plus 275 basis points and Libor plus 375 basis points and $18.0 million of long-term notes issued by Mid-Missouri Holding payable at 12-month Libor plus 150 basis points.

Alongside the IDS sale, Rural LEC will obtain a new senior secured credit facility with CIBC as lead arranger and bookrunner.

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