Cincinnati Bell 2006 Annual Report Download - page 183

In total, the Company recognized $99.8 million of loss upon extinguishment of debt. In the first quarter,
related to stage one of the refinancing plan, the loss was $7.9 million for the write-off of unamortized deferred
financing fees associated with the previous credit facility. In the third quarter, related to stage two of the
refinancing plan, the loss was $91.9 million, which was composed of $9.1 million for the write-off of the
unamortized deferred financing fees, $27.7 million for the write-off of the unamortized discount, and $55.1
million for the premium paid in conjunction with the extinguishment of the 16% Notes.
Corporate Credit Facilities
Cincinnati Bell Inc., (the “Parent Company”), entered into the Corporate credit facility in February 2005.
The $250 million revolving line of credit under the Corporate credit facility terminates in February 2010.
Borrowings under the revolving credit facility bear interest, at the Company’s election, at a rate per annum equal
to (i) LIBOR plus the applicable margin or (ii) the base rate plus the applicable margin. The applicable margin is
based on certain Company financial ratios and ranges between 1.25% and 2.25% for LIBOR rate advances, and
0.25% and 1.25% for base rate advances. Base rate is the higher of the bank prime rate or the federal funds rate
plus 0.50%.
On August 31, 2005, the Company amended the Corporate credit facility to include a $400 million term
loan. The Tranche B Term Loan bears interest at a per annum rate equal to, at the Company’s option, LIBOR
plus 1.50% or the base rate plus 0.50%. The Tranche B Term Loan is subject to quarterly principal payments of
$1 million beginning December 31, 2005 through September 30, 2011, and then in four quarterly installments of
$94 million ending on August 31, 2012. The balance on the Tranche B Term Loan was $395 million at
December 31, 2006.
The Company has a right to request, but no lender is committed to provide, an increase in the aggregate
amount of the new credit facility, up to $500 million in incremental borrowings, which may be structured at the
Company’s option as term debt or revolving debt. As of December 31, 2006, the Company had no outstanding
borrowings under its revolving credit facility, and had outstanding letters of credit totaling $4.8 million, leaving
$245.2 million in additional borrowing availability under its Corporate credit facility.
Voluntary prepayments of the Corporate credit facility and voluntary reductions of the unutilized portion of
the revolving line of credit are permitted at any time. The average interest rate charged on borrowings under the
Corporate credit facility was 6.6% and 5.6% in 2006 and 2005, respectively. The Company recorded interest
expense of $27.9 million in 2006 and $9.5 million in 2005.
Under the Corporate credit facility, the Company pays commitment fees to the lenders on a quarterly basis
at an annual rate equal to 0.50% of the unused amount of borrowings on the revolving line of credit.
Additionally, the Company pays letter of credit fees on outstanding letters of credit based on certain Company
financial ratios and ranges between 1.25% and 2.25%. These commitment fees were $1.2 million and $1.4
million in 2006 and 2005, respectively.
The Company and all its future or existing subsidiaries (other than Cincinnati Bell Telephone LLC (“CBT”),
Cincinnati Bell Extended Territories LLC and certain immaterial subsidiaries) guarantee borrowings of
Cincinnati Bell Inc. under the Corporate credit facility. Each of the Company’s current subsidiaries that is a
guarantor of the Corporate credit facility is also a guarantor of the 7% Senior Notes, 7
1
⁄ 4 % Notes due 2013, and
8
3
⁄ 8 % Notes, with certain immaterial exceptions. Refer to Note 18 for supplemental guarantor information. The
Company’s obligations under the Corporate credit facility are also collateralized by perfected first priority
pledges and security interests in the following:
•substantially all of the equity interests of the Company’s subsidiaries (other than subsidiaries of CBT and
certain immaterial subsidiaries); and,
•certain personal property and intellectual property of the Company and its subsidiaries (other than that of
CBT, Cincinnati Bell Extended Territories LLC and certain immaterial subsidiaries).
The guarantee and security reflect the addition of CBW as a guarantor and certain of its assets as collateral
due to its status as a wholly-owned subsidiary effective February 14, 2006 due to the Company’s purchase of
Cingular’s minority ownership interest in CBW on that date.
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