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Table of Contents
EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Debt
The Company's debt consisted of the following as of December 31, 2009 and 2010:
ITC^DeltaCom Senior Secured Notes due April 1, 2016
In connection with the acquisition of ITC^DeltaCom, EarthLink assumed ITC^DeltaCom's outstanding $325.0 million aggregate principal
amount of 10.5% senior secured notes due on April 1, 2016. The ITC^DeltaCom Notes accrue interest at a rate of 10.5% per year. Interest on the
ITC^DeltaCom Notes is payable semi-
annually in cash in arrears on April 1 and October 1 of each year, commencing on October 1, 2010. The
ITC^DeltaCom Notes will mature on April 1, 2016.
ITC^DeltaCom may redeem some or all of the ITC^DeltaCom Notes, at any time before April 1, 2013, at a redemption price equal to 100%
of their principal amount plus a "make-
whole" premium. ITC^DeltaCom may redeem some or all of the ITC^DeltaCom Notes at any time on or
after April 1, 2013, at specified redemption prices declining from 105.250% to 100% of their principal amount. In addition, before April 1, 2013,
ITC^DeltaCom may redeem up to 35% of the aggregate principal amount of the ITC^DeltaCom Notes at a redemption price equal to 110.5% of
their principal amount with the net proceeds of certain equity offerings. During any 12-
month period before April 1, 2013, ITC^DeltaCom may
redeem up to 10% of the aggregate principal amount of the ITC^DeltaCom Notes at a redemption price equal to 103% of their principal amount.
If (1) ITC^DeltaCom sells certain of its assets and does not either (a) apply the net sale proceeds to repay indebtedness under ITC^DeltaCom's
senior secured revolving credit facility, the ITC^DeltaCom Notes, or other indebtedness secured on a first-
priority basis or (b) reinvest the net
sale proceeds in its business, or (2) ITC^DeltaCom experiences a change of control, ITC^DeltaCom may be required to offer to purchase
ITC^DeltaCom Notes from holders at 100% of their principal amount, in the case of a sale of assets, or 101% of their principal amount, in the
case of a change of control. ITC^DeltaCom would be required to pay accrued and unpaid interest, if any, on the ITC^DeltaCom Notes redeemed
or purchased in each of the foregoing events of redemption or purchase.
The ITC^DeltaCom Notes are ITC^DeltaCom's general senior obligations and rank equally in right of payment with any future senior
indebtedness. The ITC^DeltaCom Notes are secured on a first-
priority basis, along with any future pari passu secured obligations, subject to
specified exceptions and permitted liens, by substantially all of the assets of ITC^DeltaCom and its subsidiaries that are deemed to be restricted
subsidiaries under the indenture governing the ITC^DeltaCom Notes. Currently all of ITC^DeltaCom subsidiaries are deemed to be restricted
subsidiaries under the indenture. The ITC^DeltaCom Notes are guaranteed on a senior secured basis by each of ITC^DeltaCom's restricted
subsidiaries on the initial issue date of the ITC^DeltaCom Notes and will be guaranteed on a senior secured basis by each future domestic
restricted subsidiary, other than certain excluded subsidiaries, and by any foreign restricted subsidiary that guarantees any indebtedness of
ITC^DeltaCom or any domestic
110
As of December 31,
2009
2010
(in thousands)
ITC^DeltaCom senior secured notes due April 1, 2016
$
—
$
351,251
EarthLink convertible senior notes due November 15,
2026
232,248
243,069
Carrying value of debt
232,248
594,320
Less current portion
(232,248
)
(243,069
)
Long
-
term debt, less current portion
$
—
$
351,251