Frontier Communications Corp (NASDAQ:FTR) entered into a credit agreement with CoBank, ACB, as administrative agent, and the other lenders party thereto, for a $315 million senior secured term loan facility (the “Credit Agreement”). The proceeds of the term loan have been used to repay Frontier’s existing senior secured term loan under the credit agreement dated as of October 14, 2011, as amended, among Frontier, CoBank, and the other lenders party thereto, and for general corporate purposes. The final maturity date of the Credit Agreement is October 12, 2021. Repayment of the outstanding principal balance will be made in installments of $7,875,000, the first of which will be on October 31, 2016, and thereafter will be made on a quarterly basis. The remaining outstanding principal balance will be repaid on the final maturity date. Borrowings under the term loan will bear interest based on margins over the Base Rate (as defined in the Credit Agreement) or LIBOR, at the election of Frontier. Interest rate margins under the facility (ranging from 0.875% to 2.875% for Base Rate borrowings and 1.875% to 3.875% for LIBOR borrowings) are subject to adjustment based on Frontier’s Total Leverage Ratio (as defined in the Credit Agreement). As was the case with the term loan being refinanced, the term loan under the Credit Agreement will be secured by a pledge of the stock of Frontier North Inc., a wholly owned subsidiary.
The Credit Agreement contains customary representations and warranties, affirmative and negative covenants — including a restriction on Frontier’s ability to declare dividends if an event of default has occurred or will result therefrom, and a financial covenant that requires compliance with a leverage ratio — and customary events of default. Upon proper notice, Frontier may, in whole or in part, repay the term loan without premium or penalty, but subject to breakage fees on LIBOR loans, if applicable. The foregoing description of the Credit Agreement is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is filed as Exhibit 10 to this Report and incorporated herein by reference.
