Earthlink 2014 Annual Report Download - page 85

Table of Contents EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Revolving Credit Facility
General. In May 2013, the Company entered into an amended and restated credit agreement (the “Credit Agreement”)
providing for a senior
secured revolving credit facility with aggregate revolving commitments of $135.0 million
. The senior secured revolving credit facility
terminates on May 29, 2017, and all amounts outstanding thereunder shall be due and payable in full. The Company paid $1.9 million
of
transaction fees and expenses related to the amended senior secured revolving credit facility, which are being amortized to interest expense over
the life of the credit facility using the straight-
line method. Commitment fees and borrowing costs under this facility vary and are based the
Company’s most recent Consolidated Leverage Ratio (as defined in the Credit Agreement). As of December 31, 2014 , the Company’
s
Commitment Fee was 0.5% and the Company’s borrowing cost would be LIBOR plus 3.25%
for LIBOR Rate Loans and the Base Rate plus
2.25% for Base Rate Loans. No loans were outstanding under the senior secured revolving credit facility as of December 31, 2014
. However,
$1.8 million of letters of credit were outstanding under the facility’s Letter of Credit Sublimit as of December 31, 2014 .
The Company is the borrower under the Credit Agreement. All obligations of the borrower under the Credit Agreement are guaranteed by
substantially all of the Company's existing direct and indirect domestic subsidiaries and will be guaranteed by certain of the Company's future
direct and indirect domestic subsidiaries. The obligations of the Company and the subsidiary guarantors under the Credit Agreement, as well as
obligations under certain treasury management, interest protection or other hedging arrangements entered into with a lender, are secured by
(subject to certain liens permitted by the Credit Agreement) liens, which rank equally with the Company's other senior secured indebtedness, on
or security interests in substantially all of the Company's and the subsidiary guarantors' present and future assets (subject to certain exclusions set
forth in the Credit Agreement).
Prepayment.
The Company may prepay the senior secured revolving credit facility in whole or in part at any time without premium or penalty,
subject to reimbursement of the lenders’
breakage and redeployment costs in the case of prepayment of LIBOR borrowings. The Company may
irrevocably reduce or terminate the unutilized portion of the senior secured revolving credit facility at any time without penalty.
Covenants.
The Credit Agreement contains representations and warranties, covenants, and events of default with respect to the Company and its
subsidiaries that are customarily applicable to senior secured credit facilities. The negative covenants in the Credit Agreement include
restrictions on the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make capital expenditures,
incur liens on assets, engage in certain mergers, acquisitions or divestitures, pay dividends or make other distributions, voluntarily prepay certain
other indebtedness (including certain prepayments of the Company’
s existing notes), enter into transactions with affiliates, make investments,
and change the nature of their businesses, and amend the terms of certain other indebtedness (including the Company’
s existing notes), in each
case subject to certain exceptions set forth in the Credit Agreement.
Additionally, the Credit Agreement requires the Company to maintain a consolidated net leverage ratio of not greater than 3.5 to 1.0 (with
restrictions on cash netting) and a consolidated interest coverage ratio of not less than 3.0 to 1.0. As of December 31, 2014
, the Company was in
compliance with these covenants.
2014 Developments
In October 2014, the Board of Directors authorized the Company’s management to repurchase up to $30.0 million of the Company’
s outstanding
Senior Secured Notes or Senior Notes, so long as it is in compliance with the Company’
s indenture and credit agreement covenants. In
November 2014, the Company amended its Credit Agreement to permit the repurchase of up to
$30.0 million
of its Senior Secured Notes or
Senior Notes, as long as such purchases otherwise comply with the terms of the Credit Agreement and the terms of the applicable indentures.
Financial Information Under Rule 3
-10 of Regulation S-X
The Company’
s Senior Notes and Senior Secured Notes (the "Notes") are fully and unconditionally guaranteed, jointly and severally, on a senior
unsecured basis by each of the Company’
s existing and future domestic subsidiaries, other than certain subsidiaries that are minor (the
“Guarantor Subsidiaries”). All of the Guarantor Subsidiaries are 100%
owned by the Company and have, jointly and severally, fully and
unconditionally guaranteed, to each holder of the Notes, the full and prompt performance of the Company’
s obligations under the Notes and the
indenture governing the Notes, including the payment of principal (or premium, if any) and interest on the Notes, on an equal and ratable basis.
Further, the Company has no independent assets or operations, and there are no significant restrictions on the ability of its
consolidated subsidiaries to transfer funds to the Company in the form of
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