Bear Stearns and Lehman Brothers are in the market with a $250 million senior secured credit facility for American Cellular Corp. The deal consists of a $50 million revolver and two, $100 million term loans. Pricing is LIBOR plus 2 1/2%, according to an investor.
The company will use the facility to finance its $95 million acquisition of Highland Cellular. "Highland fits in well with the company...and we are always looking to make acquisitions," said an American Cellular spokesman. There will be management changes at Highland after the acquisition, according to David McClure, Highland cfo. "American Cellular will be managing the company after the acquisition," he said. McClure could not be reached again for further clarification.
The loan will also be used for the potential acquisition of spectrum in the upcoming Advanced Wireless Services auction scheduled for August 9, according to the Federal Communications Commission. Spectrum is allocated, auctioned and licensed by the FCC and can be used to offer a variety of wireless services.
Moody's Investors Service rated the proposed facility B1 because the incremental debt represents about half of American Cellular's ownerDobson Cellular Systems' consolidated EBITDA. Moody's does not expect American Cellular to draw on the revolver and expects it to draw on the term loans on a delayed basis. The company has a relatively low pro-forma senior secured leverage of roughly 1.2 times on a fully funded basis, according to the ratings agency.
American Cellular is a subsidiary of Oklahoma City-based Dobson, but is self-financed and operates as an unrestricted entity within the Dobson group of companies. Dobson is a provider of wireless phone services to rural markets in the U.S. Beckley, W.Va-based Highland Cellular operates under the brand name Cellular One, and is a provider of Global System for Mobile Communications (GSM), Time Division Multiple Access (TDMA) and analog wireless services.