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.
The 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 corporate purposes, including the funding of 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 last week, several class-action lawsuits were filed against Dobson, charging the rural carrier of hiding a slide in roaming revenue. Dobson denied the allegations and said it would defend itself against the lawsuits.
