Time Warner Telecom Inc. announced that it has completed a new $700 million senior secured Credit Facility for its wholly-owned subsidiary, Time Warner Telecom Holdings Inc. consisting of a $600 million Term Loan B maturing in January 2013 and a $100 million Revolving Credit Facility maturing in October 2011.
Initial pricing on the Term Loan is at LIBOR plus 2.25 percent, and initial pricing on the Revolver, which is presently undrawn, is LIBOR plus 2.50 percent. The Credit Facility is guaranteed by the Company and its restricted subsidiaries. The Revolver replaces Holdings’ $110 million secured revolving credit facility.
Holdings drew $200 million on the Term Loan to extinguish its existing senior secured Term Loan B facility. Holdings will also use a portion of the Term Loan proceeds to fully redeem $240 million of the Second Priority Senior Secured Floating Rate Notes issued by Holdings, with a coupon of LIBOR plus 400 basis points (“Floating Rate Notes”). Holdings today called for the redemption of the Floating Rate Notes on November 6, 2006 at 102 percent of par, which equates to a premium of $4.8 million. The Company expects to use the remaining borrowings under the Term Loan to fund a portion of the acquisition of Xspedius Communications, LLC and related fees and expenses. Pro forma for the completion of the full draw of the $600 million Term Loan and excluding the undrawn Revolver, the Company’s gross debt will increase by approximately $161 million. After giving effect to the redemption of the Floating Rate Notes, the nearest scheduled maturity for the Company’s outstanding debt is 2013.