Earthlink 2014 Annual Report Download - page 83

Table of Contents EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The Senior Secured Notes accrue interest at a rate of 7.375%
per year, payable on June 1 and December 1 of each year, commencing on
December 1, 2013. The Senior Secured Notes will mature on June 1, 2020. No principal amount is due until June 1, 2020.
Redemption
. The Company may redeem the Senior Secured Notes, in whole or in part, (i) from June 1, 2016 until May 31, 2017 at a price equal
to 105.531%
of the principal amount of the Senior Secured Notes redeemed; (ii) from June 1, 2017 until May 31, 2018 at a price equal to
103.688%
of the principal amount of the Senior Secured Notes redeemed; (iii) from June 1, 2018 until May 31, 2019 at a price equal to
101.844% of the principal amount of the Senior Secured Notes redeemed; and (iv) from June 1, 2019 and thereafter at a price equal to 100%
of
the principal amount of the Senior Secured Notes redeemed, in each case plus accrued and unpaid interest. Prior to June 1, 2016, the Company
may also redeem the Senior Secured Notes, in whole or in part, at a price equal to 100%
of the aggregate principal amount of the Senior Secured
Notes to be redeemed plus a make
-
whole premium and accrued and unpaid interest. In addition, prior to June 1, 2016, the Company may
redeem up to 35%
of the aggregate principal amount of the Senior Secured Notes with the net cash proceeds of certain equity offerings at a price
equal to 107.375% of the principal amount of the Senior Secured Notes redeemed, plus accrued and unpaid interest.
Ranking and Guaranty
. The Senior Secured Notes and the related guarantees of certain of the Company’s wholly-
owned subsidiaries (the
“Guarantors”)
senior secured obligations and rank equally with all of the Company's and the Guarantors' other senior secured indebtedness. The
Senior Secured Notes and the guarantees are secured by a first-
priority lien on substantially all of EarthLink's assets and the assets of the
Guarantors (subject to certain exceptions and permitted liens).
Covenants
. The indenture governing the Senior Secured Notes includes covenants which, subject to certain exceptions, limit the ability of the
Company and its Restricted Subsidiaries (as defined in the indenture) to, among other things, incur additional indebtedness, make certain types
of restricted payments, create liens, transfer and sell assets, enter into certain transactions with affiliates, issue or sell stock of subsidiaries,
engage in sale-
leaseback transactions and create restrictions on dividends or other payments by restricted subsidiaries. Upon a change of control
(as defined in the indenture), the Company may be required to make an offer to repurchase the Senior Secured Notes at 101%
of their principal
amount, plus accrued and unpaid interest. The indenture governing the Senior Secured Notes also contains customary events of default. As of
December 31, 2014 , the Company was in compliance with these covenants.
The indenture governing the Senior Secured Notes contains covenants regarding the Company's ability to make Restricted Payments (as defined
in the indenture), including certain dividends, stock purchases, debt repayments and investments. As of December 31, 2014
, the indenture
governing the Company's Senior Secured Notes permitted approximately $81.6 million
in Restricted Payments. The Company's ability to make
Restricted Payments varies over time, and is determined, in part, by the extent that the Company's cumulative EBITDA exceeds 300%
of its
cumulative interest expense.
Senior Notes due May 2019
General. In May 2011, the Company completed a private placement of $300.0 million aggregate principal amount of 8.875%
Senior Notes due
2019 (the “Senior Notes”). The Senior Notes were issued at 96.555%
of their principal amount, resulting in gross proceeds of approximately
$289.7 million and net proceeds of $280.2 million after deducting transaction fees of $9.5 million
. In September 2011, in accordance with the
registration rights granted to the original purchasers of the Senior Notes, the Company completed an exchange offer of the privately placed
Senior Notes for new 8.875% Senior Notes due 2019 registered with the SEC with substantially identical terms to the original Senior Notes.
The Senior Notes accrue interest at a rate of 8.875%
per year, payable on May 15 and November 15 of each year, commencing on November 15,
2011. The Senior Notes will mature on May 15, 2019. No principal amount is due until May 15, 2019.
Redemption.
The Company may redeem the Senior Notes, in whole or in part, (i) from May 15, 2015 until May 15, 2016 at a price equal to
104.438% of the principal amount of the Senior Notes redeemed; (ii) from May 15, 2016 until May 15, 2017 at a price equal to 102.219%
of the
principal amount of the Senior Notes redeemed; and (iii) from May 15, 2017 at a price equal to 100%
of the principal amount of the Senior
Notes redeemed, in each case plus accrued and unpaid interest. Prior to May 15, 2015, the Company may also redeem the Senior Notes, in
whole or in part, at a price equal to 100% of the aggregate principal amount of the Senior Notes to be redeemed plus a make-
whole premium and
accrued and unpaid interest. In addition, prior to May 15, 2014, the Company was able to redeem up to 35%
of the aggregate principal amount
of the Senior Notes with the net cash proceeds of certain equity offerings at a price equal to 108.875%
of the principal amount of the Senior
Notes redeemed, plus accrued and unpaid interest.
74