Cavalier Telephone & TV is in the market for a $435 million senior secured credit facility that will be used to refinance existing debt and fund the buyout of TalkAmerica. The deal, led by Wachovia, comprises a five-year, $20 million revolver and a six-year, $415 million first-lien term loan. Pricing could not be determined by press time.
One investor commented that Wachovia has been getting into a lot of competitive local exchange carrier deals lately. The bank recently funded the $700 million credit facility for Time Warner Telecom, alongside Lehman Brothers back in September. Although CLECs have been generally viewed as tough credits to get through syndication by the buyside, Time Warner's name and "sane" pricing helped it through (CIN, 9/15). The credit consisted of a $100 million revolver, priced at LIBOR plus 2 1/2% and a $600 million term loan B priced at LIBOR plus 2 1/4%.
TalkAmerica announced Sept. 22 that it would be acquired by Cavalier for $8.10 per share, amounting to a purchase price of approximately $251 million. On Sept. 28, Sun Capital proposed to acquire TalkAmerica for $9 per share pending the conclusion of a due diligence review of the New Hope, Pa.-based company. On Oct. 23, Sun Capital rescinded the offer stating they could not offer more than Cavalier's $8.10 per share offer after its review. David Whitt, Cavalier cfo, was out of the office and could not be reached. Calls to a company spokesman were not returned. Calls to Ed Meyercord, TalkAmerica ceo, were not returned by press time.
Richmond, Va.-based Cavalier hit up Wachovia, Jefferies Babson Finance and CIT Group in February for a $205 million credit facility. The deal consisted of a five-year, $20 million revolver priced at LIBOR plus 4% and a $185 million term loan "B" priced at LIBOR plus 5% (CIN, 5/19). Moody's Investors Service rated the new credit B2 citing the company's financial risk and it's challenging competitive position as a CLEC. Moody's expects debt leverage to be around 3.8 times pro forma the acquisition.