Consolidated Communications revises $1.25 billion term B OID to 98.5

By Sara Rosenberg

New York, Sept. 18 – Consolidated Communications Inc. changed the original issue discount on its $1.25 billion seven-year senior secured term loan B (B2/B+) to 98.5 from talk in the range of 97 to 98, according to a market source.

Pricing on the term loan remained at Libor plus 475 basis points with a 1% Libor floor.

The term loan still has 101 soft call protection for six months.

Earlier in syndication, the term loan was upsized from $1 billion as the company’s senior secured notes offering was downsized to $750 million from $1 billion.

J.P. Morgan Securities LLC, Morgan Stanley Senior Funding Inc., Goldman Sachs Bank USA, TD Securities (USA) LLC, Wells Fargo Securities LLC and Deutsche Bank Securities Inc. are the lead banks on the deal.

Recommitments were scheduled to be due at 10 a.m. ET on Friday, the source added.

Proceeds will be used to refinance existing debt in connection with a $425 million investment in the company by Searchlight Capital Partners LP.

The investment commitment is structured in two stages. At the closing of the first stage, Searchlight will invest $350 million in the company in exchange for the right to receive an unsecured subordinated note with a principal amount of about $395 million and 8% of the company’s common stock. In addition, Searchlight will receive a contingent payment right convertible, upon the receipt of certain regulatory and shareholder approvals, into an additional 16.9% of the company’s common stock.

Upon receipt of FCC and Hart Scott Rodino approvals and the satisfaction of certain other customary conditions, Searchlight will invest an additional $75 million and will be issued the note, which will be convertible into shares of perpetual preferred stock of the company with an aggregate liquidation preference equal to the principal amount of the note at that time. In addition, the contingent payment right will be convertible into additional shares of common stock, representing 10.1% of the company’s common stock.

The parties expect to close the second stage of the investment in mid-2021.

Consolidated Communications is a Mattoon, Ill.-based broadband and business communications provider.

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