Windstream Corp. on Monday revealed it’s seeking up to $900 million of additional loan terms under its senior secured credit facilities.
The company said it would use the proceeds to “repay the credit facility revolver (without any reduction in commitments) and for general corporate purposes.” It also is seeking to “modify certain other definitions and provisions.”
Windstream needs the consent of lenders to amend and restate its current senior secured credit facilities.
The Arkansas-based telecom provider said it anticipates completing the amendment and restatement in August.
On its website, Windstream lists total debt of $8.733 billion as of March 31. The company explains that debt is comprised of $3.213 billion of senior secured debt and $5.520 billion of unsecured debt.
Standard & Poor’s Ratings Services said it anticipates Windstream will use the proceeds to repay about $800 million outstanding under its revolver.
In the first quarter, Windstream refinanced $300 million in 2015 notes and amended its credit facility to extend a portion of its Term Loan A facility to 2016. The company also raised $280 million of additional proceeds.
During a first-quarter conference call with financial analysts, Windstream Chief Financial Officer Anthony Thomas said the company ended the three-month period with net leverage or debt of 3.63 times adjusted OIBDA (operating income before depreciation and amortization). He said Windstream is “committed to reducing net leverage to 3.2 to 3.4 times.”
Windstream’s debt increased significantly thanks to its $2.3 billion acquisition last year of PAETEC Holding Corp. As part of the merger, Windstream assumed net debt of $1.4 billion.
“Windstream’s serial acquisitions have stressed its credit profile, and resulted in weaker profit margins and higher capital intensity,” Moody’s Investors Service said Tuesday. “The resulting weaker operating free cash flow is sufficient to support the company’s high dividend payout, but leaves only a narrow margin of safety.”
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