RCN Renegotiates Credit Agreement
By Karen Brown -- Multichannel News, 3/26/2002 8:41:00 AM
RCN Corp. has successfully amended its credit agreement with lender banks to effectively cut away approximately $200 million in debt restrictions and eliminate some restrictions.
At the end of 2001, RCN had approximately $1.9 billion in debt, including $750 million in senior secured debt. With the new agreement, RCN will have $650 million in cash and $1.7 billion in outstanding debt, with $563 million in senior debt.
'The bottom line is that the additional financial flexibility provided by the new amendment allows RCN to continue its efforts to reduce costs, improve operating margins and expand our customer base in our existing markets,' chairman and CEO David McCourt said in a release. 'We look forward to bringing more customers onto our network and selling them more bundled services.'
Under the reforged agreement, RCN can use up to $250 million in new funding to pay down its debt, keep the first $100 million yearly in asset sales and gain the right to a $187.5 million revolving loan two years from now.
Revised covenants in the agreement will also give RCN a cash cushion and the ability to sell noncore assets if it chooses.
The company can also form a joint venture to develop its California market, and it can obtain letters of credit to support its business operations.
In return, RCN has agreed to pay down $187.5 million of its outstanding term load, and it will take a $62.5 million reduction in its $250 million revolving-loan facility.
RCN also will not draw down its remaining $187.5 million revolving-loan facility for at least two years.
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