Hawaiian Telcom Holdco,Inc. (NASDAQ:HCOM) Files An 8-K Entry into a Material Definitive Agreement

Hawaiian Telcom Holdco,Inc. (NASDAQ:HCOM) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01. Entry into a Material Definitive Agreement.

On February24, 2017, Hawaiian Telcom Communications,Inc. (the
Borrower), a wholly-owned subsidiary of Hawaiian Telcom
Holdco,Inc. (the Company), entered into a Credit Agreement (the
Credit Agreement) with CoBank, ACB (CoBank), as administrative
agent, an issuing lender, a joint lead arranger, bookrunner and
swing line lender, and Fifth Third Bank and MUFG Union Bank,
N.A., each as a joint lead arranger and co-syndication agent and
the other lenders party thereto.

The Credit Agreement provides for (i)a delayed draw term loan A
commitment of $320 million (the Term A Loans), consisting of (a)a
term loan A-1 commitment in the principal amount of up to $90
million (the Term Loan A-1), and (B)a term loan A-2 commitment in
the principal amount of $230 million (the Term Loan A-2), and
(ii)a revolving loan commitment of up to $30 million (the
Revolving Loan). The Credit Agreement also includes an
incremental term loan option that allows the Borrower to increase
the aggregate loan commitment by up to an additional $100 million
(the Incremental Loan), letters of credit of up to $5 million
(Letters of Credit) and a swing line facility of up to $5 million
(the Swing Line Loan), subject in each case to the satisfaction
of certain conditions.

The Borrower can draw upon the Term A Loans in a single advance
between May4, 2017 (with an option to close earlier) and May31,
2017 (the Closing Date) and can draw on the Revolving Loan,
Letters of Credit,Incremental Loan and Swing Line loan any time
after the Closing Date and before the date that is five years
after the Closing Date (the Maturity Date). The lenders
obligation to extend credit on the Closing Date is conditioned
upon the occurrence of certain events, including the delivery of
specified agreements and certifications and the absence of a
material adverse change as of the Closing Date.

The Term Loan A-1 matures on the Maturity Date, and the Term Loan
A-2 matures on the date that is six years from the Closing Date
(the A-2 Maturity Date). The Revolving Loan and Swing Line Loan
mature on the Maturity Date, and the Incremental Loan matures on
the date set forth in the Incremental Term Loan Agreement, which
shall not be earlier than the A-2 Maturity Date.

The Term A Loans bear interest, at the Borrowers election, at
either the LIBOR rate or the base rate, in each case plus the
applicable margin, which varies depending on whether our total
debt to consolidated EBITDA ratio (Leverage Ratio) is less than
2.25x, or equal to or greater than 2.25x. In the case of LIBOR
loans, (a)if our Leverage Ratio is less than 2.25x, then the
applicable margin is 3.50% for the Term Loan A-1 and 3.75% for
the Term Loan A-2, and (b)if our Leverage Ratio is greater than
or equal to 2.25x, then the applicable margin is 3.75% for the
Term Loan A-1 and 4.00% for the Term Loan A-2. In the case of
alternate base rate loans, (a)if our Leverage Ratio is less than
2.25x, the applicable margin is 2.50% for the Term Loan A-1, and
2.75% for the Term Loan A-2, and (b)if our Leverage Ratio is
greater than or equal to 2.25x (a)the applicable margin is 2.75%
for the Term Loan A-1 and 3.00% for the Term Loan A-2. Below is
an illustration of the applicable rates:

TermLoanA-1

TermLoanA-2

Leverage Ratio

Applicable Marginfor BaseRate Loans

Applicable Marginfor LIBORRate Loans

Applicable Marginfor BaseRate Loans

Applicable Marginfor LIBORRate Loans

equal to or greater than 2.25x

2.75

%

3.75

%

3.00

%

4.00

%

less than 2.25x

2.50

%

3.50

%

2.75

%

3.75

%

Principal amounts outstanding on the Term Loan A-1 are due and
payable in amounts equal to 5.00% per annum payable in equal
quarterly installments beginning at the close of the first full
fiscal quarter following the Closing Date, with all unpaid
amounts due on the Maturity Date. Principal amounts outstanding
on the Term Loan A-2 are due and payable in amounts equal to
2.50% per annum for the first 8 full fiscal quarters following
the Closing Date and 5.00% per annum for each fiscal quarter
thereafter, in each case, payable in equal quarterly installments
beginning at the close of the first full fiscal quarter following
the Closing Date, with all unpaid amounts due on Maturity Date.

All obligations under the Credit Agreement will be guaranteed
on the Closing Date by the Company and the Borrowers material
subsidiaries (the Subsidiary Guarantors), and will be secured
by a first priority lien on, among other things (i)the
accounts, contracts, equipment and inventory of the Borrower
and the Subsidiary Guarantors, (ii)50% of the equity interests
in the Companys subsidiaries, (iii)substantially all of the
personal property and intangibles of the Borrower and the
Subsidiary Guarantors, including intellectual property, cash
and cash equivalents, and (iv)all of the material owned and
leased real property and fixed assets of the Borrower and the
Subsidiary Guarantors, subject in each case to the exclusion of
specified assets.

The Credit Agreement contains various representations,
warranties and affirmative, negative and financial covenants
customary for financings of this type. Additionally, covenants
in the Credit Agreement also require the Company to use the
proceeds it receives from certain asset sales, casualty events,
equity issuances, incurrence of certain debt and upon the
occurrence of other events to repay outstanding borrowings
under the Credit Agreement.

Beginning on the Closing Date, the negative covenants include
limitations on the ability of the Company, the Borrower and the
Subsidiary Guarantors to engage in certain actions. Such
limitations include, without limitation, the ability to
(i)incur certain indebtedness, (ii)permit the creation and
existence of certain liens, (iii)engage in certain transactions
with affiliates, (iv)become liable with respect to certain
contingent obligations, (v)make certain loans and investments,
(vi)make certain dividend payments or distributions above
specified limits and before specified dates, (vii)engage in
certain liquidations, acquisitions and mergers, (viii) dispose
of specified assets or subsidiaries, (ix)use the loan proceeds
other than in specified ways, (x)issue certain equity,
(xi)enter into agreements that conflict with the loan
documents, (xii)take certain actions with respect to material
contracts, (xiii)pay certain management fees, and (xiv)fail to
comply with certain anti-corruption and anti-terrorism laws,
international sanctions, and other matters. The Credit
Agreement also includes certain financial covenants, including
without limitation, (a)certain limitations on capital
expenditures in excess of $105 million per fiscal year,
(b)maintaining a leverage ratio which, beginning at the Closing
Date, does not exceed 3.25 to 1.00, which leverage ratio
decreases over time, and (c)maintaining a minimum consolidated
debt service coverage ratio of 2.75 to 1.00.

The Credit Agreement permits the Company to pay a dividend or
redeem the Companys capital stock in an aggregate amount not to
exceed (i)$3 million in calendar year 2017, and (ii)the greater
of $7 million and 50% of cash available for dividends (as
defined in the Credit Agreement) in calendar year 2018 and
thereafter; provided certain financial and other conditions are
met.

The Credit Agreement also has customary events of default,
which include, without limitation (i)the nonpayment when due of
principal or interest or any other obligation under any loan or
amounts drawn under letters of credit, (ii)a material breach of
any representation, warranty or certification, (iii)the breach
of specified covenants in the Credit Facility,
(iv)cross-defaults on other indebtedness greater than $10
million, (v)a change in control, and (viii)institution of
bankruptcy or insolvency proceedings that are not discharged
within forty-five (45) days, and other matters.

CoBank is a national cooperative bank, and a lender under the
Companys existing Credit Agreement, as amended, dated as of
February29, 2012, among the Borrower, the Company, Credit
Suisse AG, Cayman Islands Branch, as administrative agent and
collateral agent, and the lenders thereto (the Existing
Facility). In connection with the acquisition of CoBanks
approximate 7.4% pro rata share of the total outstanding
principal under the Existing Facility, the Borrower was
required to acquire and maintain equity in CoBank in such
amounts and at such times as CoBank may require in accordance
with CoBanks Bylaws and Capital Plan. The Borrower will
similarly be required to maintain such equity ownership in
connection with the Credit Agreement. As an equity owner in
CoBank, subject to CoBanks Bylaws and Capital Plan, the
Borrower will be eligible to receive patronage distributions
which, if made, would be used to reduce interest expense under
the Credit Agreement.

First Hawaiian Bank is one of the lenders under the Credit
Agreement with an approximate 5.7% pro rata share of the total
credit commitment and loan. Eric K. Yeaman is a director of the
Company and the Borrower, and is President and Chief Operating
Officer of First Hawaiian Bank. Walter A. Dods,Jr. is a
director of the Company and the Borrower, and is also a
director of First Hawaiian Bank. Messrs.Yeaman and Dods
abstained from voting on resolutions to approve the Credit
Agreement and related transactions.

The foregoing description of the Credit Agreement and the
transactions contemplated by the Credit Agreement does not
purport to be complete and is qualified in its entirety by
reference to the text of the Credit Agreement, which is filed
as Exhibit10.1 hereto and incorporated into this report by
reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number

Description

10.1

Credit Agreement dated as of February24, 2017 among
Hawaiian Telcom Communications,Inc., as the Borrower, the
Guarantors party thereto, CoBank ACB, in its capacity as
Administrative Agent for the Secured Parties, a Joint
Lead Arranger, Bookrunner, an Issuing Lender and Swing
Line Lender, Fifth Third Bank, as a Joint Lead Arranger
and Co-Syndication Agent, and MUFG Union Bank, as a Joint
Lead Arranger and Co-Syndication Agent, and the Lenders
who are a party thereto.

Forward Looking Statements

This report contains forward-looking statements. In some cases,
you can identify these statements by forward-looking words such
as may, might, will, should, expects, plans, anticipates,
believes, estimates, predicts, intends, potential, qualifiers
such as preliminary and similar expressions. Forward-looking
statements contained in this report are based on estimates and
assumptions, which assumptions and estimates may prove to be
inaccurate, and involve risks and uncertainties.
Forward-looking statements contained in this report are not
guarantees of future events, and we cannot assure you that the
Credit Agreement described herein will ultimately be funded or
that such statements will be realized. Actual results may
differ from those contemplated by such forward-looking
statements as a result of a variety of factors. The Company
disclaims any intent or obligation to update or revise any
forward-looking statements in response to new information,
unforeseen events, changed circumstances or any other
occurrence except as required by law.


About Hawaiian Telcom Holdco, Inc. (NASDAQ:HCOM)

Hawaiian Telcom Holdco, Inc. is a provider of communications services and products in Hawaii. The Company operates through two business segments: Telecommunications and Data Center Colocation. The Telecommunications segment provides local telephone service, including voice and data transport, custom calling features, network access, directory assistance and private lines. In addition, the segment provides Internet, long distance services, television service, Internet protocol (IP)-based network services, customer premises equipment, data solutions, managed services, billing and collection, wireless services and pay telephone services. The Data Center Colocation segment offers data center services, including colocation and virtual private cloud. The virtual private cloud services include the use of shared virtualized computing resources and a range of customer control features and services, including back-up storage and cloud-based network security.

Hawaiian Telcom Holdco, Inc. (NASDAQ:HCOM) Recent Trading Information

Hawaiian Telcom Holdco, Inc. (NASDAQ:HCOM) closed its last trading session down -0.09 at 24.66 with 2,787 shares trading hands.

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