OKLAHOMA CITY-Dobson Cellular Systems Inc., a wholly owned subsidiary of Dobson Communications Corp., announced the pricing of a private placement of $825 million of senior secured notes.
The notes consist of $250 million of 8.375-percent fixed-rate senior secured notes due 2011, $250 million of floating-rate senior secured notes due 2011 and $325 million of 9.875-percent second priority senior secured notes due 2011. The floating-rate notes will bear interest at a rate equal to three-month LIBOR plus 4.75 percent.
Proceeds from the debt offering will be used to refinance outstanding borrowing under the existing senior credit facility of Dobson Cellular, repurchase a portion of Dobson Communications’ outstanding debt securities in one or more privately negotiated transactions and for general purposes, including funding the subsidiary’s planned acquisition of RFB Cellular Inc. As part of the refinancing, Dobson Cellular expects to amend its existing credit facility to, among other things, eliminate the term loan portion and amend the revolving portion to provide for maximum borrowing of $75 million.
Late in October, two separate shareholder lawsuits were filed against Dobson, alleging the company in 2003 and 2004 issued false and misleading statements about its operations.
A lawsuit filed by Federman & Sherwood charges Dobson concealed a significant decrease in roaming revenues in 2003 and 2004, thereby causing the company’s stock to trade at artificially inflated levels. In addition, Schatz & Nobel P.C. filed a class-action lawsuit alleging company officers did not disclose several matters, including declining roaming revenue details, that AT&T Wireless Services Inc. wanted to dispose of its interest in Dobson, that Bank of America intended to dispose of its interest in Dobson as soon as AT&T sold its stake, and that the company was missing sales quotas and losing market share.
“Dobson believes that the suits are without merit, and it has fully complied with its disclosure obligations,” the carrier said.
Rural wireless carrier Dobson owns operations in 16 states.
