Consolidated Communications Holdings, Inc. (Nasdaq:CNSL)
("Company") announced today that it secured a new incremental term
loan facility for its pending acquisition of FairPoint
Communications, Inc. (Nasdaq:FRP), an all-stock merger valued at
approximately $1.5 billion, including debt, which was announced on
Dec. 5, 2016.
The Company previously secured underwritten debt financing for
the pending acquisition, that in addition to cash on hand and other
sources of liquidity, would be used to repay and redeem certain
FairPoint debt and pay fees and expenses associated with both the
pending acquisition and related financing. The new
incremental term loan facility provides that the Company may incur
in a single draw an aggregate principal amount of up to $935
million that would be drawn at closing of the pending
acquisition. The terms, conditions and covenants of the new
incremental term loan facility are materially consistent with the
Company’s existing term loan facility and will be treated as a
fungible tack on to the existing facility at closing. The new
facility has an interest rate of LIBOR plus 3.00 percent and the
greater of (i) a 1.00 percent LIBOR floor and (ii) the three-month
adjusted LIBOR rate.
The Company expects to close on the FairPoint acquisition by
mid-2017, after obtaining the required regulatory approvals and the
approval of both Consolidated Communications’ and FairPoint’s
shareholders. Ticking fees will start accruing to lenders
providing the incremental term loan commitments on Jan. 15, 2017
equal to the interest rate of the incremental term loan
facility. The incremental term loan facility is secured on a
pari-passu basis with the existing credit facilities under the
Company’s credit agreement.
”Given current capital market conditions as well as the strong
receptiveness to the FairPoint acquisition, we were opportunistic
on addressing this financing as soon as possible after announcing
the acquisition,” said Steve Childers, chief financial officer of
Consolidated Communications. "We are extremely pleased with
the outcome and we have significantly de-risked our capital
structure by going to market now. We greatly appreciate the
support of our underwriters and our bank group."
Morgan Stanley Senior Funding, Inc. was the left lead arranger
and bookrunner. TD Securities (USA) LLC, MUFG and Mizuho Bank LTD
were joint lead arrangers and joint bookrunners.
About Consolidated CommunicationsConsolidated
Communications Holdings, Inc. (Nasdaq:CNSL) is a leading broadband
and business communications provider throughout its 11-state
service area. Consolidated Communications leverages its
advanced fiber optic network and multiple data centers to offer a
wide range of communications solutions, including data, voice,
video, managed services, cloud computing and wireless
backhaul. Headquartered in Mattoon, IL, Consolidated
Communications has been providing services in many of its markets
for more than a century. www.consolidated.com.
Safe HarborThe Securities and Exchange
Commission (“SEC”) encourages companies to disclose forward-looking
information so that investors can better understand a company’s
future prospects and make informed investment decisions.
Certain statements in this communication are forward-looking
statements and are made pursuant to the safe harbor provisions of
the Securities Litigation Reform Act of 1995. These
forward-looking statements reflect, among other things, current
expectations, plans, strategies, and anticipated financial results
of Consolidated Communications Holdings, Inc. (the “Company”) and
FairPoint Communications, Inc. (“FairPoint”), both separately and
as a combined entity. There are a number of risks,
uncertainties, and conditions that may cause the actual results of
the Company and FairPoint, both separately and as a combined
entity, to differ materially from those expressed or implied by
these forward-looking statements. These risks and
uncertainties include the timing and ability to complete the
proposed acquisition of FairPoint by the Company, the expected
benefits of the integration of the two companies and successful
integration of FairPoint’s operations with those of the Company and
realization of the synergies from the integration, as well as a
number of factors related to the respective businesses of the
Company and FairPoint, including economic and financial market
conditions generally and economic conditions in the Company’s and
FairPoint’s service areas; various risks to stockholders of not
receiving dividends and risks to the Company’s ability to pursue
growth opportunities if the Company continues to pay dividends
according to the current dividend policy; various risks to the
price and volatility of the Company’s common stock; changes in the
valuation of pension plan assets; the substantial amount of debt
and the Company’s ability to repay or refinance it or incur
additional debt in the future; the Company’s need for a significant
amount of cash to service and repay the debt and to pay dividends
on its common stock; restrictions contained in the Company’s debt
agreements that limit the discretion of management in operating the
business; legal or regulatory proceedings or other matters that
impact the timing or ability to complete the acquisition as
contemplated, regulatory changes, including changes to subsidies,
rapid development and introduction of new technologies and intense
competition in the telecommunications industry; risks associated
with the Company’s possible pursuit of acquisitions; system
failures; losses of large customers or government contracts; risks
associated with the rights-of-way for the network; disruptions in
the relationship with third party vendors; losses of key management
personnel and the inability to attract and retain highly qualified
management and personnel in the future; changes in the extensive
governmental legislation and regulations governing
telecommunications providers and the provision of
telecommunications services; telecommunications carriers disputing
and/or avoiding their obligations to pay network access charges for
use of the Company’s and FairPoint’s network; high costs of
regulatory compliance; the competitive impact of legislation and
regulatory changes in the telecommunications industry; liability
and compliance costs regarding environmental regulations; the
possibility of disruption from the integration of the two companies
making it more difficult to maintain business and operational
relationships; the possibility that the acquisition is not
consummated, including, but not limited to, due to the failure to
satisfy the closing conditions; the possibility that the merger or
the acquisition may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; and
diversion of management’s attention from ongoing business
operations and opportunities. A detailed discussion of risks
and uncertainties that could cause actual results and events to
differ materially from such forward-looking statements are
discussed in more detail in the Company’s and FairPoint’s
respective filings with the SEC, including the Annual Report on
Form 10-K of the Company for the year ended December 31, 2015,
which was filed with the SEC on February 29, 2016, under the
heading “Item 1A—Risk Factors,” and the Annual Report on Form 10-K
of FairPoint for the year ended December 31, 2015, which was filed
with the SEC on March 2, 2016, under the heading “Item 1A—Risk
Factors,” and in subsequent reports on Forms 10-Q and 8-K and other
filings made with the SEC by each of the Company and FairPoint.
Many of these circumstances are beyond the ability of the Company
and FairPoint to control or predict. Moreover,
forward-looking statements necessarily involve assumptions on the
part of the Company and FairPoint. These forward-looking
statements generally are identified by the words “believe,”
“expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,”
“should,” “may,” “will,” “would,” “will be,” “will continue” or
similar expressions. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause actual results, performance or achievements of the Company
and FairPoint, and their respective subsidiaries, both separately
and as a combined entity to be different from those expressed or
implied in the forward-looking statements. All
forward-looking statements attributable to us or persons acting on
the respective behalf of the Company or FairPoint are expressly
qualified in their entirety by the cautionary statements that
appear throughout this communication. Furthermore,
forward-looking statements speak only as of the date they are
made. Except as required under the federal securities laws or
the rules and regulations of the SEC, each of the Company and
FairPoint disclaim any intention or obligation to update or revise
publicly any forward-looking statements. You should not place
undue reliance on forward-looking statements.
Important Merger Information and Additional
InformationThis communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. In connection with the
proposed transaction, the Company and FairPoint will file relevant
materials with the SEC. The Company will file a Registration
Statement on Form S-4 that includes a joint proxy statement of the
Company and FairPoint and which also constitutes a prospectus of
the Company. The Company and FairPoint will mail the final
joint proxy statement/prospectus to their respective
stockholders. Investors are urged to read the joint
proxy statement/prospectus regarding the proposed transaction when
it becomes available, because it will contain important
information. The joint proxy statement/prospectus
and other relevant documents that have been or will be filed by the
Company and FairPoint with the SEC are or will be available free of
charge at the SEC’s website, www.sec.gov, or by directing a request
when such a filing is made to Consolidated Communications Holdings,
Inc., 121 South 17th Street, Mattoon, IL 61938, Attention: Investor
Relations or to FairPoint Communications, Inc., 521 East Morehead
Street, Suite 500, Charlotte, North Carolina 28202, Attention:
Secretary.
The Company, FairPoint and certain of their respective
directors, executive officers and other members of management and
employees may be considered participants in the solicitation of
proxies in connection with the proposed transaction.
Information about the directors and executive officers of
the Company is set forth in its definitive proxy statement, which
was filed with the SEC on March 28, 2016. Information about the
directors and executive officers of FairPoint is set forth in its
definitive proxy statement, which was filed with the SEC on March
25, 2016. These documents can be obtained free of
charge from the sources listed above. Investors may obtain
additional information regarding the interests of such participants
by reading the joint proxy statement/prospectus the Company and
FairPoint will file with the SEC when it becomes available.
Contacts:
Jennifer Spaude, Consolidated Communications
jennifer.spaude@consolidated.com
507-386-3765
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