Amendment of Credit Facility

 

TIDMFCOM 
 
RNS Number : 8631X 
First Communications, Inc. 
21 August 2009 
 

First Communications, Inc. 
Amendment of Credit Facility 
 
 
Akron, OH - August 21, 2009 First Communications, Inc. today provides the 
following update on the successful agreement of a new amended credit facility. 
 
 
Banking Arrangements 
First Communications has been in discussions with its bank group in relation to 
renegotiating its $127.5 million credit  facility entered into on October 2, 
2008 with a bank group lead by J.P. Morgan Chase Bank, N.A.  First 
Communications, Inc has now successfully concluded these discussions and reached 
agreement with the syndicate led by J.P. Morgan Chase Bank, N.A.  The amendment 
includes the following: 
 
 
  *  The Company's maximum credit facility has been reduced to $87.5 million. The 
  refinancing includes $40 million to reduce debt and $10 million is provided to 
  free up the Company's revolver and the balance represents a term loan facility. 
  This reduction is the result of the refinancing and subsequent repayment of 
  $50.00 million of Company debt for which Diamond Communications LLC ("Diamond") 
  had provided a limited non-recourse guaranty in connection with the Company's 
  contribution of its Tower Business to Diamond. The Company has no liability of 
  Diamond's refinanced debt.  This is related to the Diamond Tower transaction 
  announcement made today by the Company. This benefits the Company by providing a 
  stabilized banking relationship as a foundation to grow and operate the 
  business. 
 
As part of the Amendment, our lenders agreed to waive existing defaults under 
the Facility. 
Mandatory Prepayments 
 
 
  *  We are required to receive at least $10 million of cash capital contributions by 
  January 31, 2010. At least $10 million of such contributions must be used to 
  repay revolving loans that are part of the facility, and the commitment to make 
  revolving loans is permanently reduced by 50% of the aggregate of such 
  repayment. One-half of any remaining amount of the capital contribution will be 
  used to prepay the term loans that are part of the Facility (in inverse order of 
  maturity), with the other one-half being available to us for working capital 
  and/or capital expenditure purposes. 
 
 
 
Maturity Date 
  *  The maturity date of the loans under the Facility has been amended so that the 
  scheduled maturity date (March 6, 2013) will occur earlier depending on the 
  amount of additional capital we raise by the end of January 2010. 
 
+--------------------------------------+--------------------------------------------+ 
|    Amount of Capital Contributed     |          Scheduled Maturity Date           | 
|            (in thousands)            |                                            | 
+--------------------------------------+--------------------------------------------+ 
|              <$10,000                |              December 7, 2010              | 
+--------------------------------------+--------------------------------------------+ 
|        >$10,000 and <$17,500         |             September 7, 2011              | 
+--------------------------------------+--------------------------------------------+ 
|        >$17,500 and <$25,000         |              December 7, 2011              | 
+--------------------------------------+--------------------------------------------+ 
|              >$25,000                |                June 7, 2012                | 
+--------------------------------------+--------------------------------------------+ 
Financial Covenants 
  *  The Facility has a minimum EBITDA test, a maximum leverage test, a minimum fixed 
  charge test, and a limitation on capital expenditures which are typical for 
  Facilities of this size and type. 
  *  Minimum EBITDA will be a quarterly test beginning July 1, 2009 with levels of 
  $2.8 million at September 30, 2009, $8.8 million at December 31, 2009, $13.6 
  million at March 31, 2010, $17.8 million at June 30, 2010, and $18.8 million at 
  September 30, 2010. Until June 30, 2010, EBITDA shall be determined on a 
  cumulative basis since July 1, 2009. Thereafter, it shall be determined on a 
  last twelve months basis. 
  *  Maximum leverage (total debt to EBITDA) of 5.5 to 1.0 at March 31, 2010, 5.0 to 
  1.0 at June 30, 2010, 4.25 to 1.0 at September 30, 2010, 4.0 to 1.0 at December 
  31, 2010, and 3.50 to 1.0 thereafter. 
  *  Minimum fixed charge coverage of 1.0 to 1.0 at December 31, 2010 and March 
  31, 2011, 1.1 to 1.0 at June 30, 2011 and 1.2 to 1.0 thereafter. 
  *  Maximum capital expenditures of $10 million during any consecutive twelve-month 
  period. 
 
 
 
Pricing 
The new pricing grid, based on leverage, will be as follows. It will apply for 
both the revolving loans and term loans under the Facility. 
 
 
+----------+--------------------------+-----------------+----------------+-------------+ 
|  Level   |  Total Debt to EBITDA    | Commitment Fee  |  LIBOR Margin  | ABR Margin  | 
+----------+--------------------------+-----------------+----------------+-------------+ 
|    I     |      >6.00 to 1.00       |    100 bps      |    600 bps     |  500 bps    | 
+----------+--------------------------+-----------------+----------------+-------------+ 
|    II    | >4.50 to 1.00 and <6.00  |     75 bps      |    550 bps     |  450 bps    | 
|          | to 1.00                  |                 |                |             | 
+----------+--------------------------+-----------------+----------------+-------------+ 
|   III    |      <4.50 to 1.00       |     50 bps      |    500 bps     |  400 bps    | 
+----------+--------------------------+-----------------+----------------+-------------+ 
Ray Hexamer, CEO of First Communications, commented, "Our strong bank group led 
by J.P. Morgan Chase were outstanding partners in helping us position First 
Communications, Inc. for future growth as a dominate player in the Midwest 
providing data and voice service to our customers. We feel this arrangement 
helps set the foundation for continued growth". 
 
 
For Further Information: 
 
 
+--------------------------------------------+------------------------------------------+ 
| First Communications, Inc.                 |                                          | 
+--------------------------------------------+------------------------------------------+ 
| Joe Morris                                 | Tel: [phone]                   | 
+--------------------------------------------+------------------------------------------+ 
|                                            |                                          | 
+--------------------------------------------+------------------------------------------+ 
| Collins Stewart Europe Limited             |                                          | 
+--------------------------------------------+------------------------------------------+ 
| Piers Coombs, Stewart Wallace              | Tel: [phone]                | 
+--------------------------------------------+------------------------------------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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