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
'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
RCN also will not draw down its remaining $187.5 million revolving-loan
facility for at least two years.