Southeastern CLEC itcd they announced that it intends to sell $325M in senior secured notes due 2016 to qualified institutional buyers this week. Then intend to use the proceeds to refinance their senior secured credit facilities, which totaled $307M or so at the end of the third quarter. The credit facilities will come due in 2013 and 2014 so there was no huge urgency to refinance, and the interest rates are pretty low currently so if anything their interest expenses will rise. However, the terms are (I believe) fairly covenant-heavy, and therefore what Deltacom is doing here is probably about flexibility.
Simultaneously, Deltacom offered a preview of their full year 2009 performance today. Deltacom generally reports at the last minute, often after they have actually filed with the SEC. Hence, this preannouncement is obviously directly. Full year revenues are expected to be $469M, which puts the Q4 number around $112M, down another 4-5% sequentially. Full year EBITDA is projected at $88M, which puts Q4 EBITDA at $20M, down about $3M sequentially. The company finished the year with $68M in cash. The company doesn’t give much guidance and the street doesn’t follow them much, but these results are probably in-line with expectations.
Deltacom also offered a breakdown of core and non-core revenues over the past few years, telling a familiar story of extensive non-core shrinkage alongside core growth. Non-core revenues have declined from 35% of total revenues in 2006 to just 21% or so in 2009. That’s a lot lower now, which implies that the company is closer to a period of growth as its core services become dominant – but we’re still not there just yet. With economic recovery, however, perhaps Deltacom will find 2010 to be more favorable hunting ground.
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