Alaska Communications Systems Group, Inc. (NASDAQ:ALSK) Files An 8-K Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Item 2.03, Alaska Communications Systems Holdings, Inc. (Alaska
Communications) repaid all amounts outstanding under the Credit
Agreement, dated September14, 2015, between Alaska
Communications, as the borrower, Alaska Communications Systems
Group, Inc. (the Parent or the Company) and certain of the
Parents direct and indirect subsidiaries, as guarantors, CoBank,
ACB, as administrative agent, ING Capital LLC, as syndication
agent, and the lenders party thereto (theFirst Lien Credit
Agreement), as well as the Second Lien Credit Agreement, dated
September14, 2015, between Alaska Communications, as borrower,
the Parent and certain of the Parents direct and indirect
subsidiaries, as guarantors, Crystal Financial LLC, as
administrative agent, and the lenders party thereto (theSecond
Lien Credit Agreement). The First Lien Credit Agreement, which
has been terminated as of March28, 2017, provided for a
$65million first lien term loan facility, together with a
$10million revolving credit facility, and the Second Lien Credit
Agreement, which has been terminated as of March28, 2017,
provided for a $25million second lien term loan facility. The
outstanding principal balances under the First Lien Credit
Agreement and the Second Lien Credit Agreement prior to their
repayment on March28, 2017 were $61.75million and $25million,
respectively.
The parties to the First Lien Credit Agreement, including CoBank,
ACB and ING Capital LLC, are parties to the Credit Agreement
described in Item 2.03, have in the past performed, and may in
the future perform, investment banking, financial advisory,
lending, or commercial banking services, or other services for
the Parent, Alaska Communications and their subsidiaries, for
which they receive, have received, and may in the future receive,
compensation and expense reimbursement.
The information set forth in Item 2.03 of this report is hereby
incorporated by reference under this Item 1.02.
| Item2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On March13, 2017, Alaska Communications, as borrower, entered
into a credit agreement with the Parent and certain of the
Parents direct and indirect subsidiaries, as guarantors, ING
Capital LLC, as administrative agent, and the lenders party
thereto (theCredit Agreement), to provide debt financing in the
form of a revolving facility in an aggregate amount at any one
time outstanding not to exceed $15million, including a letter of
credit subfacility and swingline subfacility with commitment
limitations based on amounts drawn under the revolving facility
(collectively, the Revolving Facility), a term loan facility
(A-1) in the aggregate amount not to exceed $120million (theTerm
A-1 Facility) and term loan facility (A-2) in the aggregate amount
not to exceed $60million (theTerm A-2 Facility, and collectively
with the Revolving Facility and Term A-1 Facility, theCredit
Facility).
On March28, 2017, Alaska
Communications satisfied conditions precedent to the disbursement
of funds by the lenders under the Credit Agreement, and borrowed
an aggregate principal amount of $180million under the Credit
Facility. Alaska Communications used approximately $86.75million
of the net proceeds, together with approximately $0.75million
cash on hand, to repay Alaska Communications outstanding
indebtedness under the First Lien Credit Agreement and Second
Lien Credit Agreement. In addition, $94million of the proceeds
are to be used to finance the purchase or repayment at maturity
of the 6.250% convertible notes of the Parent having a due date
of May1, 2018 (the Convertible Notes) (including through payment
relating to the tender offer for the Convertible Notes launched
on March17, 2017 (the Tender Offer)), which proceeds were
disbursed into and are being held in a full dominion account.
Such proceeds will be released to purchase or repay principal of
the Convertible Notes.
Amounts outstanding under the
Term A-1 Facility bear an interest rate of LIBOR plus 5%, and
amounts outstanding under the Term A-2 Facility bear an interest
rate of LIBOR plus 7%, each with a LIBOR floor of
1%.
Principal payments are due
quarterly commencing December31, 2017. The Term A-1 Facility
begins amortization at the rate of 1.25% per quarter for
approximately two years and stepping up thereafter. The Term A-2
Facility begins amortization at the rate of 0.25% per quarter for
approximately three years and stepping up
thereafter.
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For more information regarding
the Credit Facility, please see the complete text of the related
Credit Agreement, which has been filed as Exhibit 10.1 to, and
the description thereof in, the Companys Current Report on Form
8-K dated March15, 2017.
The information set forth in
Item 1.02 of this report is hereby incorporated by reference
under this Item 2.03.
| Item2.04 |
Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
The information set forth in
Items 1.02 and 2.03 of this report is hereby incorporated by
reference under this Item 2.04.
Forward-Looking
Statements
The information herein
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 managements 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 Companys control. Such factors include,
without limitation, Federal and Alaska Universal Service Fund
changes, our ability to meet the terms and conditions of the
Credit Agreement and the Credit Facility, draw down funds under
and repay the Credit Facility and continue to meet applicable
requirements, our ability to complete the Tender Offer for the
Convertible Notes or otherwise repurchase the Convertible Notes
or make repurchases of shares of common stock under the Companys
repurchase plan or otherwise, adverse economic conditions, the
effects of competition in our markets, our relatively small size
compared with our competitors, the Companys 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 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
Companys 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 Companys business,
please refer to the Companys SEC filings, including, but not
limited to, the sections entitled Risk Factors and Managements
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 the Companys
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 SECs website,
www.sec.gov.
This Current Report on Form
8-K shall not constitute an offer to purchase, or a solicitation
of an offer to sell, securities. The Tender Offer may be made
only to the terms and conditions of the Companys Offer to
Purchase, dated March17, 2017 (as it may be amended or
supplemented from time to time, the Offer to Purchase), and the
related Letter of Transmittal (as it may be amended or
supplemented from time to time, the Letter of Transmittal) and
the other related Tender Offer materials. An issuer tender offer
statement on Schedule TO, including the Offer to Purchase and the
Letter of Transmittal, describing the Tender Offer has been filed
with the SEC. Holders of the Convertible Notes are encouraged to
read the Schedule TO, as may be amended, and its exhibits
carefully before making any decision with respect to the Tender
Offer because it contains important information. The Schedule TO,
the Offer to Purchase, the Letter of Transmittal and other
related Tender Offer materials are available free of charge at
the website of the SEC at www.sec.gov. In addition, the Company
will provide copies of the Schedule TO and related Tender Offer
materials upon request free of charge to holders of the
Convertible Notes.
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About Alaska Communications Systems Group, Inc. (NASDAQ:ALSK)
Alaska Communications Systems Group, Inc. is a fiber broadband and managed information technology (IT) services provider. The Company is focused primarily on business and wholesale customers in and out of Alaska. The Company also provides telecommunication services to consumers across Alaska. The Company’s facilities-based communications network extends across Alaska and connects to the contiguous states through its undersea fiber optic cable systems and its usage rights on an undersea system. It serves customers in various areas, such as Business and Wholesale (broadband, voice and managed IT services); Consumer (broadband and voice services), and Other Services (including carrier termination, equipment sales, access services and support services receiving federal support funding). It provides voice and broadband services to residential customers. It provides voice and broadband origination and termination services to inter and intrastate carriers serving its retail customers. Alaska Communications Systems Group, Inc. (NASDAQ:ALSK) Recent Trading Information
Alaska Communications Systems Group, Inc. (NASDAQ:ALSK) closed its last trading session down -0.04 at 1.81 with 61,365 shares trading hands.
