Citizens gets $990 million bridge loan for Commonwealth buy, considering public debt sale

By Sara Rosenberg

New York, Sept. 18 - Citizens Communications Co. has received a commitment for a $990 million bridge loan to back its acquisition of Commonwealth Telephone Enterprises Inc., with the expectation being that the loan will provide flexibility on when to go the public debt markets, company officials said in a conference call Monday.

The bridge loan, committed by Citigroup, is unsecured and will have a tenor of 12 months.

The $990 million commitment is the maximum amount of debt that the company would use to finance the acquisition, officials said in the call, explaining that it is premature to lay out what would be done at closing, but there are some alternatives, including a significant amount of cash on the balance sheet.

However, the company did keep reiterating that the bridge loan commitment will give "flexibility as to timing when we want to go to the public markets."

When asked if it were to put an unsecured or secured term loan in place for permanent financing, Citizens responded that it would be unsecured.

Under the acquisition agreement, Stamford, Conn.-based Citizens will pay Commonwealth shareholders $41.72 per share in a cash-and-stock taxable transaction for a total consideration of $1.16 billion, based on the closing price of Citizens' stock on Sept. 15. Each Commonwealth share will receive $31.31 in cash and 0.768 shares of Citizens' common stock.

The combined company will be the 7th largest local telephone exchange company in the United States, with pro forma annual revenues of $2.4 billion and operations across 23 states.

The transaction is expected to close in mid 2007, subject to approval by Commonwealth's shareholders, as well as the satisfaction of certain customary conditions, including Hart-Scott Rodino antitrust clearance and necessary approvals from the FCC and the Pennsylvania Public Utility Commission.

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