Syndication launched last week for Alaska Communication Systems Group's (ACS) refinancing, which is being done in place of an initial public offering of Income Deposit Securities (IDS). "We decided that the IDS was not the appropriate structure for us and instead we looked at other opportunities and this refinancing that we're doing now, as well as our dividend plan, is a much better path for us at ACS rather than the IDS," a company spokeswoman explained.
IDS offerings were touted at one time as the hot trend. The structure was designed to pay a monthly income stream based on interest payments on notes and dividend income on common stock. Almost all fizzled out after failing to make it through U.S. regulatory hurdles. Alliance Laundry Holdings came to the bank debt market last week with a facility that backs the $450 million acquisition of the company by Teachers' Private Capital, the private equity arm of the Ontario Teachers' Pension Plan, after its IDS offering was not completed.
ACS is looking to lower its interest rate. The new credit facility comprises a $50 million revolver and $335 million term loan. The company's existing credit facility is priced at LIBOR plus 3 1/4%, the spokeswoman noted, but she declined to comment on what the company is looking to take the spread down to.
Market participants said price talk is LIBOR plus 2 1/4-1/2%. CIBC World Markets, Bank of America and J.P. Morgan are leading the credit. Proceeds from the credit, along with a $75 million common stock offering of primary shares, will be used to repay the existing bank facility, all outstanding shares of its 9 3/8% senior subordinated notes and around 35% of outstanding 9 7/8% senior notes due 2011. Officials from the lead banks either declined comment or did not return calls.