Item 1.01 Entry into a Material Definitive Agreement.
Strategic Investment by Searchlight Capital Partners
On October 2, 2020, Consolidated Communications Holdings, Inc. (the "Company")
completed its previously announced sale of 6,352,842 shares of common stock of
the Company, par value $0.01 per share (the "Common Stock") to Searchlight III
CVL, L.P., an affiliate of Searchlight Capital Partners, L.P. (the "Investor"),
in connection with the initial closing (the "Initial Closing") of the previously
disclosed Investment Agreement by and between the Company and the Investor (the
"Investment Agreement").
In connection with the Initial Closing, on October 2, 2020, (i) the Company
entered into a contingent payment right agreement with the Investor (the
"Contingent Payment Right Agreement") pursuant to which the Company issued to
the Investor a contingent payment right (the "Contingent Payment Right") that
will automatically convert into 17,870,012 shares of Common Stock subject to the
terms and conditions of the Contingent Payment Right Agreement. and (ii) the
Company entered into a registration rights agreement with the Investor (the
"Registration Rights Agreement") granting the Investor customary registration
rights with respect to the securities purchased from the Company pursuant to the
Investment Agreement and the Contingent Payment Right Agreement. The terms of
the Contingent Payment Right Agreement and the Registration Rights Agreement are
more fully described in the Company's Current Report on Form 8-K filed on
September 14, 2020.
The foregoing descriptions of the Contingent Payment Right Agreement and
Registration Rights Agreement are not complete and are qualified in their
entirety by reference to the full text of the Contingent Payment Right Agreement
and Registration Rights Agreement, which are attached to this Current Report on
Form 8-K as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated
herein by reference.
In connection with the Initial Closing, the Investor obtained the right to
receive, at or prior to the Second Closing (as defined in the Investment
Agreement), a subordinated note with an aggregate principal amount of
approximately $395.5 million (the "Subordinated Note"), which initially will be
non-convertible, but which will, at the Second Closing, be convertible into
shares of a new series of preferred stock, par value $0.01, of the Company, to
be designated the Company's Series A Perpetual Preferred Stock, par value $0.01
per share (the "Series A Preferred Stock"). The terms of the Subordinated Note
and the Series A Preferred Stock are more fully described in the Company's
Current Report on Form 8-K filed on September 14, 2020.
Credit Agreement
On October 2, 2020, the Company, its wholly owned subsidiary, Consolidated
Communications, Inc. ("CCI"), as borrower, certain other wholly owned
subsidiaries of CCI, as guarantors (the "Guarantors"), and the lenders party
thereto entered into a Credit Agreement (the "Credit Agreement") which consists
of a $250 million revolving credit facility (the "Revolving Facility") and term
loans in the aggregate amount of $1.25 billion (the "Term Loans"). The Credit
Agreement also provides CCI with the ability to borrow or incur, subject to
certain terms and conditions, incremental loans or incremental revolving
facilities in an aggregate amount of up to the greater of (a) $300 million plus
(b) an amount which would not cause its senior secured leverage ratio to exceed
3.70 to 1.00 on a pro forma basis. The Credit Agreement is secured by
substantially all of the assets of the Company, CCI and the Guarantors, subject
to certain exceptions.
The loans incurred under the Revolving Facility will mature on October 2, 2025
and the Term Loans will mature on October 2, 2027.
Loans incurred under the Credit Agreement bear interest at a rate equal to an
applicable rate plus, at the Company's option, either (a) a base rate plus
determined by reference to the greatest of (i) the prime rate, (ii) the United
States federal funds effective rate plus 1/2 of 1% or (iii) a one-month reserve
eurocurrency rate plus 1% or (b) an adjusted eurocurrency rate, in each case as
. . .
Item 1.02 Termination of a Material Definitive Agreement
Termination of the Existing Credit Agreement
The proceeds of the transactions described in this Form 8-K were used, in part,
by the Company to repay in full the outstanding loans and other obligations
under the Third Amended and Restated Credit Agreement, dated as of October 5,
2016 (as amended, supplemented or modified prior to the date hereof, the
"Existing Credit Agreement"), by and among the Company, CCI, certain
subsidiaries of the Company as guarantors, the lenders party thereto from time
to time, and Wells Fargo Bank, National Association, as administrative agent and
collateral agent. The Existing Credit Agreement was terminated and all liens
granted under the Existing Credit Agreement were released in connection with
such repayment.
Satisfaction and Discharge of 6.50% Senior Notes due 2022
On October 2, 2020, Wells Fargo Bank, National Association, as trustee (the
"Existing Trustee") for CCI's 6.50% Senior Notes due 2022 (the "Existing
Notes"), at CCI's direction, delivered a notice of redemption to holders of the
Existing Notes to redeem all outstanding Existing Notes at a price equal to 100%
of the aggregate principal amount of Existing Notes being redeemed plus accrued
and unpaid interest thereon to, but excluding, the redemption date. The Existing
Notes were issued under an Indenture, dated as of September 18, 2014 (as
amended, supplemented or otherwise modified from time to time, the "Existing
Indenture") among CCI (as successor to Consolidated Communications Finance II
Co.), the Company, certain subsidiaries of the Company and the Existing Trustee.
Substantially concurrently with the issuance of the Notes and the entry into the
Credit Agreement, using a portion of the proceeds of the transactions described
in this Form 8-K, CCI deposited with the Existing Trustee an amount sufficient
to pay and discharge the entire indebtedness under the Existing Notes, and the
Existing Indenture was satisfied and discharged. The Existing Notes will be
redeemed on November 2, 2020, in accordance with the notice of redemption
delivered on October 2, 2020.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K under
the headings "Credit Agreement" and "Senior Secured Notes Offering" is
incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.02. The issuances of the Subordinated
Note, the Contingent Payment Right and the shares of Common Stock pursuant to
the Investment Agreement are exempt from registration under the Securities Act
by virtue of the exemption provided by Section 4(a)(2) of the Securities Act.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Pursuant to the previously disclosed Governance Agreement, dated as of
September 13, 2020, by and between the Company and the Investor, and effective
as of the Initial Closing, the Board of Directors of the Company (the "Board")
increased its size from eight to nine members and David Fuller, a designee of
the Investor, was appointed as a member of the Board of Directors.
Mr. Fuller will be entitled to receive similar compensation, benefits,
reimbursement, indemnification and insurance coverage for his service as a
director as the independent directors of the Company receive in connection with
such service. The Company's non-employee director compensation program is
described in further detail in its Proxy Statement for the 2020 Annual Meeting
of Stockholders filed on March 23, 2020.
Except as described in this Current Report on Form 8-K, there are no
transactions between Mr. Fuller and the Company that would be reportable under
Item 404(a) of Regulation S-K.
Mr. Fuller and the Company will enter into an indemnification agreement
requiring the Company to indemnify him to the fullest extent permitted under
Delaware law with respect to his service as a director. The indemnification
agreement will be in substantially the form entered into with the Company's
other directors and executive officers and filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on May 7, 2013.
Mr. Fuller is the chair of the board of directors at Mitel Networks and is also
a member of the board of directors of Great-West Lifeco (Canada Life, Empower,
Irish Life). He is also a Senior Advisor to the Boston Consulting Group, where
he plays an advisory role to their Technology, Media and Telecom practice
globally. Prior to this, Mr. Fuller was the Executive Vice-President of TELUS
Corporation ("TELUS"), a Canadian telecommunications company, and President,
TELUS Consumer and Small Business Solutions, from 2014 until January 2019. He
previously served as the Chief Marketing Officer of TELUS from 2009 to 2014 and
the Senior Vice-President of TELUS Business Solutions Marketing from 2004 to
2009. Prior to joining TELUS, Mr. Fuller spent 15 years in the management
consulting industry with a number of firms, culminating in the country managing
partner role at KPMG Consulting. He has previously served as a director of The
Royal Conservatory of Music and the Board of Trustees of the Ontario Science
Centre. Mr. Fuller is a Professional Engineer and holds a MBA from the Schulich
School of Business at York University and a Bachelor of Applied Science in
Engineering from Queen's University.
Item 8.01. Other Events.
On October 2, 2020, the Company issued a press release announcing the Initial
Closing, the entry into the Credit Agreement and the issuance of the Notes. The
press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and
is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
--------------------------------------------------------------------------------
(d) Exhibits
No. Description
4.1 Indenture, dated as of October 2, 2020, by and among Consolidated
Communications, Inc., Consolidated Communications Holdings, Inc., the
other Guarantors party thereto and Wells Fargo Bank, National Association,
as Trustee.
4.2 Form of 6.500% Senior Secured Note due 2028 (included as Exhibit A to
Exhibit 4.1 hereto).
10.1 Contingent Payment Right Agreement, dated as of October 2, 2020, by and
between Consolidated Communications Holdings, Inc. and Searchlight III
CVL, L.P.
10.2 Registration Rights Agreement, dated as of October 2, 2020, by and
between Consolidated Communications Holdings, Inc. and Searchlight III
CVL, L.P.
10.3 Credit Agreement, dated as of October 2, 2020, among Consolidated
Communications Holdings, Inc., Consolidated Communications, Inc., the
Lenders and other parties referred to therein, Wells Fargo Bank, National
Association, as Administrative Agent, Issuing Bank and Swingline Lender.
99.1 Press Release dated October 2, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses
CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. 
