Telephone and Data, U.S. Cellular get $700 million of five-year revolvers at Libor plus 125-225 bps

By Susanna Moon

Chicago, May 16 – Telephone and Data Systems, Inc. obtained a $400 million senior revolving credit facility due May 10, 2023 last Thursday, according to an 8-K filing with the Securities and Exchange Commission.

Pricing will be Libor plus 125 basis points to 225 bps based on the company’s debt ratings.

Proceeds will be used for general corporate purposes, including working capital, non-hostile acquisitions, spectrum purchases and capital expenditures.

Wells Fargo Bank, NA is the administrative agent. Wells Fargo Securities, LLC, TD Securities (USA) LLC, Citigroup Global Markets Inc., CoBank, ACB, U.S. Bank NA and RBC Capital Markets are the co-lead arrangers and joint book managers; Toronto Dominion (Texas), LLC is the syndication agent; and Citibank, NA, Cobank, ACB, U.S. Bank NA and Royal Bank of Canada are the co-documentation agents.

The financial covenants require that consolidated interest coverage ratio must not be less than 3 times at the end of any fiscal quarter and that the consolidated leverage ratio may not be greater than 3.25 times initially and then 3 times beginning July 1, 2019.

A change of control would constitute a default and require that all debt outstanding under the revolving credit agreement be repaid, the release noted.

TDS’s first tier wholly owned subsidiaries, other than Suttle Straus, Inc., have jointly and severally unconditionally guaranteed the payment and performance of the obligations of TDS under the agreement.

U.S. Cellular revolver

The company’s subsidiary, United States Cellular Corp., obtained a $300 million senior revolving credit facility due May 10, 2023 with pricing of Libor plus 125 bps to 225 bps based on the company’s debt ratings.

The company entered into the credit agreement on May 10 with Toronto Dominion (Texas), LLC as administrative agent, according to a separate 8-K/A filing with the SEC.

Toronto-Dominion Bank, New York Branch is the letter-of-credit issuer and swingline lender; TD Securities (USA) LLC, Wells Fargo Securities, LLC, Citigroup Global Markets Inc., CoBank, ACB, U.S. Bank NA and RBC Capital Markets are the co-lead arrangers and joint book managers; Wells Fargo Bank, NA is the syndication agent; and Citibank, NA, Cobank, ACB, U.S. Bank NA and Royal Bank of Canada are the co-documentation agents.

Proceeds will be used for general corporate purposes, including working capital, non-hostile acquisitions, spectrum purchases and capital expenditures.

The financial covenants require that the consolidated interest coverage ratio must not be less than 3 times at the end of any fiscal quarter and that the consolidated leverage ratio may not be greater than 3.25 times initially and then 3 times beginning July 1, 2019.

In connection with the revolver, U.S. Cellular and TDS entered into a subordination agreement.

U.S. Cellular also entered into an amendment to conform the term loan agreement.

Telephone and Data Systems is a diversified telecommunications services company. United States Cellular provides wireless telecommunications services. Both are based in Chicago.

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