Goldman Sachs will wrap up Data Transmission Network's refinancing in the next week with investors oversubscribing the $155 million, seven-year "B" loan and five-year $20 million revolver. Pricing on the debt is LIBOR plus 3 1/4% for the B2-rated credit. The refinancing will retire the company's existing $132 million of bank debt and repay $31 million of junior sub debt. Rich Halle, Data Transmission's cfo declined comment.
The Omaha, Neb.-based company, which provides information services to the agricultural and energy markets, went through a 30-day reorganization before coming out of bankruptcy protection in October 2003. It had previously been bought in a leveraged buyout by Veronis, Suhler & Associates. The new owners after the restructuring were GSC Partners. Leverage is anticipated to be 3.3 times, compared to 3.9 times at the end of 2003.
Since then, its new owners and management have focused on eliminating redundancies, stemming customer churn and developing new products, according to Moody's Investors Service. But DTN continues to lose subscribers and there is limited growth potential of its business model. Ratings could be downgraded if DTN is unable to replace its subscriber churn with new customers or fails to continue upgrading existing subscribers to its higher priced subscription offerings. Ratings could be upgraded though, over time as free cash flow generation permits organic deleveraging, unimpeded by sponsor dividends, stock buybacks, acquisitions or other unexpected uses of cash. "In this respect, management has emphasized the priority which it places on debt reduction," Moody's reported.