Earthlink 2000 Annual Report Download - page 52

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EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. DEBT
CREDIT FACILITY
On February 17, 1999, in conjunction with the NETCOM transaction, MindSpring entered into a credit agreement with First Union National
Bank and several other lenders. In February 1999, the Company borrowed approximately $80 million under the credit facility to finance the
NETCOM acquisition. The Company repaid all amounts outstanding under the credit facility using a portion of the net proceeds from the
offering of common stock completed in April 1999. As a consequence of MindSpring's merger with EarthLink Network, Inc. the credit facility
was terminated which resulted in an extraordinary loss of $1.5 million, which has been recorded as merger-related cost.
CONVERTIBLE NOTES
In March 1999, MindSpring filed a universal shelf registration statement with the Securities and Exchange Commission for the public offering
from time to time of up to $800 million of debt and equity securities. In April 1999, MindSpring sold $180.0 million aggregate principal
amount of 5% Convertible Subordinated Notes due 2006, raising net proceeds of approximately $174.1 million. The notes were convertible
into shares of the common stock of MindSpring at any time prior to their maturity or their redemption by the Company at a rate of 16 shares
per each $1,000 principal amount of notes, or $62.50 per share, subject to adjustment in certain circumstances.
Upon completion of the merger of EarthLink Network and MindSpring, EarthLink adopted the indentures and the notes became convertible
into shares of EarthLink common stock. Completion of the merger constituted a "change in control" of MindSpring under the indentures. Thus,
each holder of notes had the right to demand payment equal to 100% of the principal amount of the notes, plus accrued interest. Accordingly, in
February 2000, the Company offered to purchase for cash all of its 5% Convertible Subordinated Notes. On March 31, 2000, approximately
$179.1 million of the $180.0 million aggregate principal amount of the notes outstanding were tendered to the Company for repurchase. The
total payment of $183.4 million including interest was paid in April 2000. The untendered notes will continue to be subject to the Indenture
Agreement. The repurchase resulted in an extraordinary loss of $5.3 million, which has been recorded as merger-related costs.
7. COMMON STOCK ISSUED
FOLLOW-ON OFFERINGS
In May 1998, MindSpring completed a follow on public offering of 6.0 million shares of its common stock at $8.84 per share. Net proceeds
from the offering were approximately $49.8 million.
In June 1998, EarthLink Network completed a follow on public offering of 6.1 million shares of its common stock at $18.58 per share. The
offering consisted of 4.9 million shares, including 791,000 shares sold to Sprint in accordance with its preemptive rights under the Sprint
Alliance, and an underwriter's over-allotment of 1.2 million shares. Net proceeds to the Company were approximately $106.3 million.
In December 1998, MindSpring completed a follow on public offering of 4.6 million of its common stock at $28.50 per share. Net proceeds
from the offering were approximately $124.8 million.
In January 1999, EarthLink Network completed a follow on public offering of 3.9 million shares of its common stock at $45.59 per share. The
offering consisted of 3.7 million shares and an underwriter's
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