Telephone and Data Systems, Inc. Enters into $200 Million Credit Agreement
January 09, 2020 at 04:28 pm
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On January 6, 2020, Telephone and Data Systems, Inc. (TDS) entered into a $200 million Credit Agreement by and among TDS as Borrower, CoBank, ACB as Administrative Agent, and the lenders party thereto and identified therein (Term Loan Credit Agreement). The Term Loan Credit Agreement provides TDS with a $200 million senior term loan credit facility for general corporate purposes, including working capital and capital expenditures. Borrowings under the Term Loan Credit Agreement bear interest, at TDS’ option, either at a LIBOR rate or at an alternative base rate, plus, in each case, an applicable margin. The two financial covenants described below are included in the Term Loan Credit Agreement: 1. consolidated interest coverage ratio (the ratio of consolidated ebitda to consolidated interest charges) may not be less than 3.00 to 1.00 as of the end of any fiscal quarter. 2. consolidated leverage ratio (the ratio of consolidated funded indebtedness to consolidated ebitda) may not be greater than 3.00 to 1.00 as of the end of any fiscal quarter. The term loan under the Term Loan Credit Agreement will be unsecured, subject to certain limitations. Additionally, certain wholly-owned subsidiaries are guarantors under the Term Loan Credit Agreement. The Term Loan Credit Agreement includes representations and warranties, covenants, events of default and other terms and conditions that are substantially similar to TDS’ existing revolving credit agreement. A Change in Control, as such term is defined in the Term Loan Credit Agreement, of TDS would constitute a default and would enable the required lenders and the Administrative Agent to require all borrowings outstanding under the Term Loan Credit Agreement to be repaid. The continued availability of the Term Loan Credit Agreement requires TDS to comply with certain negative and affirmative covenants, maintain the above financial ratios and provide representations on certain matters at the time of each borrowing. The Term Loan Credit Agreement permits TDS to make one or more borrowings aggregating up to $200 million from the agreement date through the one-year anniversary of the agreement date, or January 6, 2021. Currently, no borrowings have been made under the Term Loan Credit Agreement. Amounts borrowed under the Term Loan Credit Agreement will be due and payable in quarterly installments of $500,000 beginning on June 30, 2021 through December 31, 2026, and the remaining unpaid balance will be due and payable in full on the seventh anniversary of the agreement date, or January 6, 2027. Some of the lenders and/or agent under the Term Loan Credit Agreement and/or their affiliates may have various relationships with TDS and its subsidiaries involving banking or other financial services, including checking, cash management, brokerage, lending, investment banking, depository, indenture trustee and/or other services, including serving as a lender under the TDS revolving credit agreements.
Telephone and Data Systems, Inc. is a diversified telecommunications company. It provides wireless, cable and wireline broadband, video, and voice, and hosted and managed services through its businesses, UScellular, TDS Telecom and OneNeck IT Solutions. Its segments include UScellular and TDS Telecom. TDS segment provides wireless telecommunications services. UScellular segment offers a range of devices, such as smartphones and other handsets, tablets, wearables, mobile hotspots, routers, and Internet of things devices. UScellular also offers a range of accessories, including wireless essentials such as cases, screen protectors, chargers, memory cards and consumer electronics such as audio, home automation and networking products. TDS Telecom owns, operates and invests in quality networks, services and products in a mix of small to mid-sized urban, suburban and rural communities throughout the United States. TDS Telecom provides a range of broadband, video, and voice communications.