FiberNet Telecom Group increased its existing $75 million credit facility to $105 million for working capital in conjunction with the company's expansion plan. Jon DeLuca, cfo, said the company went straight to its existing lenders. "[They] offered the most favorable terms," he said. No new covenants were added, although the date the facility expires was extended to six years rather than the previous four.
The company is expanding its territory into Chicago and Los Angeles, DeLuca said. "We're building out our telecom networks," he said. "We've identified Chicago and Los Angeles as great opportunities for business. They're key gateway cities with telecom traffic."
DeLuca also noted that in a time of more conservative new issuance, the company is especially happy with the additional financing. "The equity and bank markets are challenging right now, and there's very little new issuance, which is only going to the premier companies," he said. "We're pleased to be part of XO, McCleod (USA), and Time Warner, meaning [we're] one of the companies that was able to raise new capital right now."
Deutsche Bank, First Union Bank, and TD Securities are the lead arrangers. Pricing on the new deal is LIBOR plus 41Ž 2%, which replaces the original LIBOR plus 6%. "We're very pleased we could get this pricing with the market the way it is," DeLuca said. He declined to say whether additional banks joined the syndicate with the new financing, but said the company is always open to new banks approaching it. He said the company's earnings before interest, taxation, depreciation and amortization for this year are not yet available. The company has no other lines of credit.