Frontier Communications 2014 Annual Report Download - page 46

Company. Interest rate margins under the facility (ranging from 0.875% to 2.875% for Base Rate
borrowings and 1.875% to 3.875% for LIBOR borrowings) are subject to adjustments based on the
Total Leverage Ratio of the Company, as such term is defined in the 2011 CoBank Credit Agreement.
The interest rate on this facility at December 31, 2014 was LIBOR plus 2.875%.
Revolving Credit Facility
On June 2, 2014, the Company entered into a new revolving credit agreement with JPMorgan
Chase Bank, N.A., as administrative agent, the lenders party thereto and the other parties named
therein (the Revolving Credit Agreement), for a $750 million revolving credit facility (the Revolving
Credit Facility) with a scheduled termination date of May 31, 2018 and terminated its existing revolving
credit facility (the Prior Revolving Credit Facility) under the Credit Agreement, dated as of May 3, 2013,
among the Company, JPMorgan Chase Bank, N.A., as administrative agent, the lenders party thereto
and the other parties named therein (the Prior Revolving Credit Agreement). As of December 31, 2014,
the Revolving Credit Facility was fully available and no borrowings had been made thereunder.
Associated commitment fees under the Revolving Credit Facility will vary from time to time depending
on the Company’s debt rating (as defined in the Revolving Credit Agreement) and were 0.450% per
annum as of December 31, 2014. During the term of the Revolving Credit Facility, the Company may
borrow, repay and reborrow funds, and may obtain letters of credit, subject to customary borrowing
conditions. Loans under the Revolving Credit Facility will bear interest based on the alternate base rate
or the adjusted LIBO Rate (each as determined in the Revolving Credit Agreement), at the Company’s
election, plus a margin based on the Company’s debt rating (ranging from 0.50% to 1.50% for alternate
base rate borrowings and 1.50% to 2.50% for adjusted LIBO Rate borrowings). The interest rate on
this facility at December 31, 2014 would have been 1.50% or 2.50%, respectively, as of December 31,
2014. Letters of credit issued under the Revolving Credit Facility will also be subject to fees that vary
depending on the Company’s debt rating. The Revolving Credit Facility is available for general
corporate purposes but may not be used to fund dividend payments.
Covenants
The terms and conditions contained in our indentures, the 2011 CoBank Credit Agreement, the
2014 CoBank Credit Agreement and the Revolving Credit Agreement include the timely payment of
principal and interest when due, the maintenance of our corporate existence, keeping proper books
and records in accordance with U.S. GAAP, restrictions on the incurrence of liens on our assets
securing indebtedness and our subsidiaries’ assets, restrictions on the incurrence of indebtedness by
our subsidiaries and restrictions on asset sales and transfers, mergers and other changes in corporate
control subject to important qualifications and exceptions. We are not subject to restrictions on the
payment of dividends either by contract, rule or regulation, other than that imposed by the General
Corporation Law of the State of Delaware. However, we would be restricted under the 2011 CoBank
Credit Agreement, the 2014 CoBank Credit Agreement and the Revolving Credit Agreement from
declaring dividends if an event of default occurred and was continuing at the time or would result from
the dividend declaration.
The 2011 CoBank Credit Agreement, the 2014 CoBank Credit Agreement and the Revolving
Credit Agreement each contain a maximum leverage ratio covenant. Under those covenants, we are
required to maintain a ratio of (i) total indebtedness minus cash and cash equivalents in excess of
$50 million to (ii) consolidated adjusted EBITDA (as defined in the agreements) over the last four
quarters not to exceed 4.50 to 1.
Certain indentures for our senior unsecured debt obligations limit our ability to create liens on our
assets securing indebtedness and our subsidiaries’ assets or merge or consolidate with other
companies, our subsidiaries’ ability to borrow funds and to engage in change of control transactions,
subject to important exceptions and qualifications.
As of December 31, 2014, we were in compliance with all of our debt and credit facility covenants.
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES