On March 13, 2017, Alaska Communications Systems Holdings, Inc.,
as Borrower, Alaska Communications Systems Group, Inc., as Parent
(collectively “Alaska Communications”) and subsidiaries of Alaska
Communications, as guarantors, and ING Capital LLC, as
administrative agent, entered into a new senior credit facility,
which provides for term loans including a $120 million tranche
maturing in 2022 with an interest rate of LIBOR plus 5% and a $60
million tranche maturing in 2023 with an interest rate of LIBOR
plus 7%, in addition to a $15 million revolving credit facility
with an interest rate of LIBOR plus 5% (collectively, the “2017
Senior Credit Facility”).
Upon the satisfaction of certain standard conditions, on or
before March 28, 2017, the 2017 Senior Credit Facility will be
funded and Alaska Communications will use the proceeds to repay in
full the outstanding borrowings under its 2015 Senior Credit
Facilities totaling approximately $87 million, set aside an amount
equal to the $94 million outstanding principal balance of its 6.25%
Convertible Notes due May 1, 2018 and to pay fees and expenses
related to the transaction. Alaska Communications expects to launch
a tender offer to repurchase the convertible notes.
Principal payments on the new debt will be due quarterly
commencing December 31, 2017. The larger tranche begins
amortization at the rate of 1.25% per quarter for approximately two
years and stepping up thereafter, while the second tranche begins
amortization at the rate of 0.25% per quarter for approximately
three years and stepping up thereafter. The facility will be
subject to customary covenants, including two key financial
covenant ratios. The first is a net leverage coverage ratio not to
exceed 3.75 to 1, stepping down over time, as provided in the
facility. The second is a fixed charge coverage ratio of not less
than 1.05 to 1, as provided in the facility. The facility also
includes a $10 million starter basket to repurchase the Parent’s
outstanding stock, subject to, among other things, certain excess
free cash flow and liquidity requirements. Purchases in excess of
$10 million may also be allowed under the facility if, among other
things, an additional net leverage test is met. The facility also
provides for incremental loans up to an additional $50 million,
subject to obtaining applicable lender commitments.
“We are pleased to announce we have closed an agreement
extending our senior debt maturities to 2022 and 2023, and, subject
to certain limitations, providing for the repurchase of the
convertible notes. The cost of borrowing under the 2017 Senior
Credit Facility is similar to that of our 2015 Senior Credit
Facilities, which was scheduled to mature next year. We look
forward to working with this group of lenders who can support our
business over the long term,” Alaska Communications SVP of Finance
Laurie Butcher said.
Parent will file a Current Report on Form 8-K that describes the
transactions in greater detail. Management is also hosting a
conference call and live webcast on Tuesday, March 14, 2017 at 5:00
p.m. Eastern Time to discuss the 4th Quarter and year-end 2016
earnings results. The live webcast will include a slide
presentation. Parties in the United States and Canada can access
the call at 1-800-245-1683 and enter pass code 264066. All other
parties can access the call at 1-719-325-2120.
Forward-Looking Statements
This press release includes certain "forward-looking
statements," as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
based on management's beliefs as well as on a number of assumptions
concerning future events made using information currently available
to management. Readers are cautioned not to put undue reliance on
such forward-looking statements, which are not a guarantee of
performance and are subject to a number of uncertainties and other
factors, many of which are outside Alaska Communications’ control.
Such factors include, without limitation, Federal and Alaska
Universal Service Fund changes, our ability to meet the terms and
conditions of the new credit facility, draw down funds under the
facility and continue to meet its requirements, our ability to
commence and complete the expected tender offer for our 6.25%
Convertible Notes or otherwise repurchase such notes due 2018 or
make repurchases of shares of Common Stock under the Parent’s
repurchase plan or otherwise, adverse economic conditions, the
effects of competition in our markets, our relatively small size
compared with our competitors, Alaska Communications’ ability to
compete, manage, integrate, market, maintain, and attract
sufficient customers for its products and services, adverse changes
in labor matters, including workforce levels, our ability to
service our debt (including pursuant to our refinanced credit
arrangements) and refinance as required, labor negotiations,
including renegotiating our collective bargaining agreement,
employee benefit costs, our ability to control other operating
costs, disruption of our suppliers’ provisioning of critical
products or services, the impact of natural or man-made disasters,
changes in Alaska Communications’ relationships with large
customers, unforeseen changes in public policies, regulatory
changes, changes in technology and standards, our internal control
over financial reporting, and changes in accounting standards or
policies, which could affect reported financial results. For
further information regarding risks and uncertainties associated
with the Parent’s business, please refer to Parent's SEC filings,
including, but not limited to, the sections entitled "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our most recent annual report on Form
10-K and subsequent quarterly reports on Form 10-Q. Copies of
Parent's SEC filings may be obtained by contacting its investor
relations department at (907) 564-7556 or by visiting its investor
relations website at www.alsk.com or at the SEC’s website,
www.sec.gov.
Important Information Regarding the Expected Tender
Offer
This press release is for informational purposes only and is
neither an offer to buy nor the solicitation of an offer to sell
any and all of Alaska Communications Systems Group Inc.’s
outstanding 6.25% Convertible Notes due 2018. The expected tender
offer described in this press release has not yet commenced, and
there can be no assurances that Parent will commence the tender
offer on the terms and conditions described in this press release
or at all. If Parent commences the tender offer, the tender offer
will be made solely by an Offer to Purchase, the Letter of
Transmittal and related materials, as they may be amended or
supplemented. Stockholders should read Parent’s commencement tender
offer statement on Schedule TO expected to be filed with the SEC in
connection with the tender offer, which will include as exhibits
the Offer to Purchase, the Letter of Transmittal and related
materials, as well as any amendments or supplements to the Schedule
TO when they become available, because they will contain important
information. If Parent commences the tender offer, each of these
documents will be filed with the SEC, and, when available,
stockholders may obtain them for free from the SEC at its website
(www.sec.gov) or from the Parent’s information agent in connection
with the tender offer.
About Alaska Communications
Alaska Communications (NASDAQ: ALSK) is a leading provider of
advanced broadband and managed IT services for businesses and
consumers in Alaska. The company operates a highly reliable,
advanced statewide data and voice network with the latest
technology and the most diverse undersea fiber optic system
connecting Alaska to the contiguous U.S. For more information,
visit http://www.alaskacommunications.com or
http://www.alsk.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20170314005495/en/
Alaska CommunicationsMedia Contact:Hannah Blankenship,
907-564-1326Hannah.Blankenship@acsalaska.comorInvestor
Contact:Tiffany Smith, 907-564-7556investors@acsalaska.com
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