J.P. Morgan, Goldman Sachs and Lehman Brothers are leading an $875 million credit facility to fund The Carlyle's Group's $1.6 billion acquisition of Verizon Hawaii. Syndication of the loan launched last Tuesday. The facility consists of a seven-year, $175 million revolver; a seven-year, $300 million "A" term loan; and a seven-and-a-half year, $400 million term loan "B." Pricing is LIBOR plus 2 1/4% on all tranches.
On Wednesday the company launched an offering of senior floating notes and senior fixed notes due 2013 and senior subordinated notes due 2015, which it expects will bring in proceeds of $550 million.
The acquisition has been in the works for almost a year, but has been held up while the parties waited for approval from the Hawaii Public Utilities Commission. In mid-March the commission approved the acquisition by a vote of 2-1, but with stipulations, specifically the amount of debt the company could take on. Carlyle had 10 days to agree, seek reconsideration or seek an extension. The company sought two extensions before settling on terms.
Verizon Communications eventually lowered the purchase price to $1.6 billion from $1.65 billion. The reduced price was contingent on Carlyle putting more equity into the deal to lower the company's debt-to-equity ratio to 75.3% from the proposed 82.5%. Carlyle also cannot take any kind of dividend until there is 35% equity in the deal, nor can it sell the directories part of the business without further approval. A Carlyle spokesman said the review was to determine whether the sale of the company was in the best interest of its users, the citizens of Hawaii.
The deal is expected to close in early May, at which time the company will be renamed Hawaiian Telcom. The takeover includes Verizon Hawaii's local telephone operations, its long-distance business, internet service business and its directories business. It does not include Verizon Wireless on the islands; though Carlyle does plan to offer wireless service, the Carlyle spokesman said. A spokeswoman for Verizon Hawaii referred calls to Carlyle.
