Optical networks communications firm Broadwing has increased its credit line from $2.1 billion to $2.3 billion with a six-year, $200 million, "C" term loan.Credit Suisse First Boston was picked to lead the add-on for the Cincinnati-based company, which is intended to reduce the borrowings on the revolver to increase liquidity, said Mark Peterson, treasurer. Broadwing wanted to have a longer maturity date on some paper, noted Peterson, explaining the decision to use a "C" term loan rather than increase the "A" or "B" tranches.
CSFB was one of the five original banks in a $2.1 billion credit, and for the last two to three months presented an interesting proposal to access the markets at a good price. The spread was 2 3/4 % over LIBOR. Salomon Smith Barney, Bank of New York, Bank of America and CSFB were mandated arrangers on the old credit and PNC Bank had a managing agent role on the $1.8 billion credit originated in November 1999 and amended to $2.1 billion in January 2000. Broadwing has no plans to access the high-yield markets in the near future, said Petersen, though ultimately the firm, previously known as Cincinnati Bell, would like to.
Despite tight capital markets and skepticism to telecom companies, Broadwing had no problems raising the money, noted Peterson. "Many of the other telecom companies don't have the same credit characteristics," he added. CSFB did not have to hold onto paper as 25 institutions came on board, he added. The overall loan is split between a $900 million revolving credit, a $750 million term loan "A", and a $450 million "B" term loan. Pricing on the "A" is LIBOR plus 1 3/4 % and on the "B" is LIBOR plus 2 1/4 %.