Cincinnati Bell 2013 Annual Report Download - page 171

Form 10-K Part II Cincinnati Bell Inc.
Borrowings and Commitment Fees, Corporate Credit Agreement
As of December 31, 2013, the Company had $40.0 million of outstanding borrowings under the Corporate
Credit Agreement, leaving $160.0 million available. There were no borrowings under the Corporate Credit
Agreement as of December 31, 2012.
The Company pays commitment fees for the unused amount of borrowings on the Corporate Credit
Agreement and letter of credit fees on outstanding letters of credit. The commitment fees are calculated based on
the total leverage ratio and range between 0.500% and 0.625% of the actual daily amount by which the aggregate
revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations. These fees
were $1.0 million in 2013, $1.6 million in 2012, and $2.3 million in 2011.
Accounts Receivable Securitization Facility
Cincinnati Bell Inc. and certain of its subsidiaries have an accounts receivable securitization facility
(“Receivables Facility”), which permits maximum borrowings of up to $120.0 million as of December 31, 2013.
On June 3, 2013, the Company executed an amendment of its Receivables Facility which, in addition to
modifying some of the defined terms and purchaser parties under the prior agreement, provided for an increase in
the maximum credit availability under the Receivables Facility from $105.0 million to $120.0 million and
extended the facility’s expiration through June 2016. CBT, CBET, Cincinnati Bell Wireless, LLC (“CBW”),
Cincinnati Bell Any Distance Inc. (“CBAD”), Cincinnati Bell Any Distance of Virginia LLC, CBTS, and eVolve
Business Solutions LLC (“eVolve”) all participate in this facility. The available borrowing capacity is calculated
monthly based on the quantity and quality of outstanding accounts receivable and thus may be lower than the
maximum borrowing limit. At December 31, 2013, the available borrowing capacity was $111.4 million. On
October 1, 2012, the Company and CBF amended the Receivables Facility to remove CyrusOne as an originator
and to remove the CyrusOne receivables from the financing provided under the Receivables Facility.
The transferors sell their respective trade receivables on a continuous basis to CBF, a wholly-owned limited
liability company. In turn, CBF grants, without recourse, a senior undivided interest in the pooled receivables to
various purchasers, including commercial paper conduits, in exchange for cash while maintaining a subordinated
undivided interest in the form of over-collateralization in the pooled receivables. The transferors have agreed to
continue servicing the receivables for CBF at market rates; accordingly, no servicing asset or liability has been
recorded. The Receivables Facility is subject to bank renewal every 364 days, and in any event expires in June
2016. In the event the Receivables Facility is not renewed, management believes it would be able to refinance
any outstanding borrowings under the Corporate Credit Agreement.
Although CBF is a wholly-owned consolidated subsidiary of the Company, CBF is legally separate from the
Company and each of the Company’s other subsidiaries. Upon and after the sale or contribution of the accounts
receivable to CBF, such accounts receivable are legally assets of CBF, and, as such, are not available to creditors
of other subsidiaries or the parent company.
For the purposes of consolidated financial reporting, the Receivables Facility is accounted for as a secured
financing. Because CBF has the ability to prepay the Receivables Facility at any time by making a cash payment
and effectively repurchasing the receivables transferred pursuant to the facility, the transfers do not qualify for
“sale” treatment on a consolidated basis under ASC 860, “Transfers and Servicing.”
Of the total borrowing capacity of $111.4 million at December 31, 2013, $106.2 million consisted of
outstanding borrowings and $5.2 million consisted of outstanding letters of credit. Interest on the Receivables
Facility is based on the LIBOR rate plus 0.5%. The average interest rate on the Receivables Facility was 0.7% in
2013. The Company pays letter of credit fees on the securitization facility and also pays commitment fees on the
total facility. These fees were $0.7 million in 2013, 2012 and 2011.
83/4% Senior Subordinated Notes due 2018
In March 2010, the Company issued $625 million of 8 3/4% Senior Subordinated Notes due 2018 (“8 3/4%
Senior Subordinated Notes”), which are fixed rate bonds to maturity.
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Form 10-K