Alaska Communications Strengthens its Liquidity & Financial Flexibility, While Reducing Borrowing Rates, With Refinancing of ...
January 15 2019 - 5:41PM
Business Wire
Alaska Communications (NASDAQ: ALSK) today announced it
refinanced its credit agreements, thereby negotiating a reduction
in its interest rates, extending the term, increasing capacity for
shareholder friendly actions, resetting and widening key covenant
thresholds and establishing incremental flexible capacity for
success-based capital expenditures.
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 (“ING”), as sole book runner and
joint-lead arranger, entered into a new senior credit facility with
existing and additional lenders. A summary of the terms
follows:
- Established a single Term Loan of $180
million with a reduced interest rate of LIBOR + 450 basis points
(bps), replacing the previous A1 tranche at LIBOR + 500 bps and the
A2 tranche at LIBOR + 700 bps, and extending the term to 2024 from
2022.
- Increased the Revolving Credit Facility
to $20 million at LIBOR + 450 bps from $15 million at LIBOR + 500
bps.
- Secured a new Delayed Draw Term Loan
(“DDTL”) of $25 million at LIBOR + 450 bps, which is available for
a period of twenty-four months, to be used specifically for
success-based capital projects.
- At close, net total debt available to
the Company will be $225 million, with $180 million drawn.
"In the context of a very volatile and challenging market
situation, our ability to secure favorable terms while concurrently
increasing our access to capital reflects our credit group’s
confidence in the credibility of the Company’s business plan, and
our ability to execute against that plan. Important highlights from
the transaction include:
- Retiring the high cost A2 tranche while
favorably repricing the new Term Loan compared to the A1
tranche.
- Extending the term loan by 2 years,
creating even greater stability and certainty.
- Creating flexible capacity between the
DDTL and Revolver to enable investment in meaningful growth
opportunities we see ahead of us. The DDTL capacity is not for the
purpose of financing acquisitions, but specifically targeted to
strengthening our fiber footprint only in the support of contracted
revenue opportunities.
- Resetting our key covenants while
widening the thresholds and providing us with greater
flexibility.
- Creating an initial restricted payments
basket of $5 million for dividends or share buybacks, while
allowing additional restricted payments from certain operating cash
flows, allowing the Board to consider a range of shareholder
friendly actions.
Our refinancing gives us the tools we need to execute to our
organic plan. This positions us well and in no way detracts our
attention from active consideration of appropriate strategic
actions to enhance shareholder value,” said Anand Vadapalli,
president and CEO of Alaska Communications.
“ING is pleased to continue its great partnership with Alaska
Communications as its lead lender, and we look forward to
continuing our great partnership with the company. We believe the
success of this transaction demonstrates that there are a group of
thoughtful lending institutions that recognize Alaska
Communications’ intrinsic value and long-term potential,” said
Stephen Nettler, Managing Director of ING Capital LLC.
Alaska Communications will file a Current Report on Form 8-K
that describes the transactions in greater detail.
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 the Company’s control. Such
factors include, without limitation, Federal and Alaska Universal
Service Fund changes, funding through the rural health care
universal service support mechanism and our ability to comply with
the regulatory requirements to receive those support payments,
adverse economic conditions, the effects of competition in our
markets, our relatively small size compared with our competitors,
the Company’s 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 and refinance as required,
labor negotiations, employee benefit costs, our ability to control
other operating costs, disruption of our supplier’s provisioning of
critical products or services, the actions of activist
shareholders, the impact of natural or man-made disasters, changes
in Company's 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 Company’s business, please
refer to the Company'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 annual report on Form 10-K and quarterly reports on Form 10-Q.
Copies of the Company'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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190115005947/en/
Media ContactHeather Cavanaugh, 907-564-7722Director, External
Affairs and Corporate Communications
Investor ContactTiffany Smith, 907-564-7556Manager, Board and
Investor Relationsinvestors@acsalaska.com
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