EarthLink Announces Refinancing of Credit Facility and Partial Redemption of 8-7/8% Senior Notes due 2019
June 30 2016 - 5:01PM
EarthLink Holdings Corp. (NASDAQ:ELNK), a leading network services
provider dedicated to delivering great customer experiences, today
announced that it has refinanced its $135 million revolving credit
facility which otherwise would have matured in May 2017. The
new amended and restated credit facility provides for a $125
million revolving credit facility and a $50 million delayed draw
term loan. EarthLink’s current borrowing cost under the
amended and restated credit facility is LIBOR plus 3.25%. The
amended and restated credit facility matures on June 30, 2021,
except that if EarthLink’s existing 7-3/8% senior secured notes due
2020 have not been repaid in full by February 29, 2020, the
maturity date will be February 29, 2020. The term loan will
be subject to quarterly amortization of principal.
EarthLink today also announced that it has
delivered a notice of redemption for $90 million aggregate
principal amount of its outstanding 8-7/8% Senior Notes due 2019
(CUSIP No. U2678F AA8) (the “Notes”). The redemption will
occur on August 4, 2016 and holders of the Notes to be
redeemed will receive a redemption price equal to 102.219% of the
principal amount of such Notes, plus accrued and unpaid interest
to, but excluding, the redemption date.
Deutsche Bank Trust Company Americas, the trustee under the
indenture governing the Notes, is sending a notice of redemption to
all currently registered holders of the Notes.
To facilitate the redemption, EarthLink intends
to use approximately $40 million of existing cash and draw down the
$50 million term loan and up to $5 million under the revolving
credit facility. EarthLink’s annualized debt service cost following
these actions is expected to be $6 million lower than it is today.
In addition EarthLink will recognize approximately $2.3 million in
debt retirement expenses in the third quarter of 2016 in connection
with the redemption.
“We are pleased to have accomplished this
refinancing of our credit facility and redemption of higher cost
debt,” stated Executive Vice President, Chief Financial Officer
Louis Alterman. “These actions further improve our balance sheet
and facilitate continued investment in growth while preserving
corporate flexibility.”
This press release is for informational purposes
only and does not constitute a notice of redemption with respect to
or an offer to purchase or sell (or a solicitation of an offer to
purchase or sell) any securities.
About EarthLink
EarthLink (EarthLink Holdings Corp.), (NASDAQ:ELNK) is a leading
network services provider dedicated to delivering great customer
experiences in a cloud connected world. We help thousands of
multi-location businesses securely establish critical connections
in the cloud. Our solutions for cloud and hybrid
networking, security and compliance, and unified communications
provide the cost-effective performance and agility to serve
customers anytime, anywhere, via any channel, or any device. We
operate a nationwide network spanning 29,000+ fiber route miles,
with 90 metro fiber rings and secure data centers that provide
ubiquitous data and voice IP coverage. To learn why thousands of
specialty retailers, restaurants, franchisors, financial
institutions, healthcare providers, professional service firms,
local governments, residential consumers and other carriers choose
to connect with us, visit us at www.earthlink.com, @earthlink, on
LinkedIn and Google+.
Cautionary Information Regarding Forward-Looking
Statements
This press release includes “forward-looking”
statements (rather than historical facts) that are subject to risks
and uncertainties that could cause actual results to differ
materially from those described. Although we believe that the
expectations expressed in these forward-looking statements are
reasonable, we cannot promise that our expectations will turn out
to be correct. Our actual results could be materially different
from and worse than our expectations. With respect to such
forward-looking statements, we seek the protections afforded by the
Private Securities Litigation Reform Act of 1995. These risks
include, without limitation: (1) that we may not be able to execute
our strategy to successfully transition to a leading managed
network, security and cloud services provider, which could
adversely affect our results of operations and cash flows; (2) that
we may not be able to increase revenues from our growth products
and services to offset declining revenues from our traditional
products and services, which could adversely affect our results of
operations and cash flows; (3) that if we are unable to adapt to
changes in technology and customer demands, we may not remain
competitive, and our revenues and operating results could suffer;
(4) that failure to achieve operating efficiencies and otherwise
reduce costs would adversely affect our results of operations and
cash flows; (5) that we may have to undertake further restructuring
plans that would require additional charges; (6) that we may be
unable to successfully divest non-strategic products, which could
adversely affect our results of operations; (7) that acquisitions
we complete could result in operating difficulties, dilution,
increased liabilities, diversion of management attention and other
adverse consequences, which could adversely affect our results of
operations; (8) that we face significant competition in our
business markets, which could adversely affect our results of
operations; (9) that failure to retain existing customers could
adversely affect our results of operations and cash flows; (10)
that decisions by legislative or regulatory authorities, including
the Federal Communications Commission, relieving incumbent carriers
of certain regulatory requirements, and possible further
deregulation in the future, may restrict our ability to provide
services and may increase the costs we incur to provide these
services; (11) that if we are unable to interconnect with AT&T,
Verizon and other incumbent carriers on acceptable terms, our
ability to offer competitively priced local telephone services will
be adversely affected; (12) that the continued decline in switched
access and reciprocal compensation revenue will adversely affect
our results of operations; (13) that failure to obtain and maintain
necessary permits and rights-of-way could interfere with our
network infrastructure and operations; (14) that if our larger
carrier customers terminate the service they receive from us, our
wholesale revenue and results of operations could be adversely
affected; (15) that we obtain a majority of our network equipment
and software from a limited number of third-party suppliers; (16)
that work stoppages experienced by other communications companies
on whom we rely for service could adversely impact our ability to
provision and service our customers; (17) that our commercial and
alliance arrangements may not be renewed or may not generate
expected benefits, which could adversely affect our results of
operations; (18) that our consumer business is dependent on the
availability of third-party network service providers; (19) that we
face significant competition in the Internet access industry that
could reduce our profitability; (20) that the continued decline of
our consumer access subscribers will adversely affect our results
of operations; (21) that lack of regulation governing wholesale
Internet service providers could adversely affect our operations;
(22) that cyber security breaches could harm our business; (23)
that privacy concerns relating to our business could damage our
reputation and deter current and potential users from using our
services; (24) that interruption or failure of our network,
information systems or other technologies could impair our ability
to provide our services, which could damage our reputation and harm
our operating results; (25) that our business depends on effective
business support systems and processes; (26) that if we, or other
industry participants, are unable to successfully defend against
disputes or legal actions, we could face substantial liabilities or
suffer harm to our financial and operational prospects; (27) that
we may be accused of infringing upon the intellectual property
rights of third parties, which is costly to defend and could limit
our ability to use certain technologies in the future; (28) that we
may not be able to protect our intellectual property; (29) that we
may be unable to hire and retain sufficient qualified personnel,
and the loss of any of our key executive officers could adversely
affect us; (30) that unfavorable general economic conditions could
harm our business; (31) that government regulations could adversely
affect our business or force us to change our business practices;
(32) that our business may suffer if third parties are unable to
provide services or terminate their relationships with us; (33)
that we may be required to recognize impairment charges on our
goodwill and other intangible assets, which would adversely affect
our results of operations and financial position; (34) that we may
have exposure to greater than anticipated tax liabilities and we
may be limited in the use of our net operating losses and certain
other tax attributes in the future; (35) that our indebtedness
could adversely affect our financial health and limit our ability
to react to changes in our business and industry; (36) that we may
require substantial capital to support business growth, and this
capital may not be available to us on acceptable terms, or at all;
(37) that our debt agreements include restrictive covenants, and
failure to comply with these covenants could trigger acceleration
of payment of outstanding indebtedness; (38) that we may reduce, or
cease payment of, quarterly cash dividends; (39) that our stock
price may be volatile; (40) that provisions of our certificate of
incorporation, bylaws and other elements of our capital structure
could limit our share price and delay a change of control of the
company; and (41) that our bylaws designate the Court of Chancery
of the State of Delaware as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by
our stockholders, which could limit our stockholders’ flexibility
in obtaining a judicial forum for disputes with us or our
directors, officers or employees. These risks and uncertainties, as
well as other risks and uncertainties that could cause our actual
results to differ significantly from management’s expectations, are
not intended to represent a complete list of all risks and
uncertainties inherent in our business, and should be read in
conjunction with the more detailed cautionary statements and risk
factors included in our Annual Report on Form 10-K for the
year ended December 31, 2015 and our Quarterly Report on Form
10-Q for the three months ended March 31, 2016.
Investors
Trey Huffman
404-748-6219
huffmanal@elnk.com
Media
Randi Drinkwater
404-709-3404
randi.drinkwater@elnk.com
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