UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(D) of the Securities Exchange Act of
1934
|
Date
of report (Date of earliest event reported) |
February 23,
2005 |
|
CINCINNATI
BELL INC. |
|
(Exact
Name of Registrant as Specified in Its
Charter) |
|
Ohio |
1-8519 |
31-1056105 |
|
(State
or Other Jurisdiction of Incorporation) |
(Commission
File Number) |
(IRS
Employer Identification No.) |
| |
|
201
East Fourth Street, Cincinnati OH, 45202 |
|
(Address
of Principal Executive Offices) (Zip Code) |
| |
|
Registrant’s
telephone number, including area code |
(513)
397-9900 |
| |
| |
|
(Former
name or former address, if changed since last
report) |
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
|
Form 8-K |
|
Cincinnati
Bell Inc. |
Item 1.01
Entry into a Material Definitive Agreement.
Notes
Offerings
On
February 16, 2005, Cincinnati Bell Inc. (the “Company”) and certain of its
subsidiaries, as guarantors (the “Guarantors”), issued
and sold $250,000,000 aggregate principal amount of the Company’s 7% Senior
Notes due 2015 (the “7% Notes”) and $100,000,000 aggregate principal amount of
the Company’s 8-3/8% Senior Subordinated Notes due 2014 (the “8-3/8% Notes” and,
together with the 7% Notes, the “Notes”).
In
connection with the issuance and sale of the 7% Notes, the Company and certain
of its subsidiaries entered
into an Indenture (the “7% Indenture”), dated as of February 16, 2005, by and
among the Company, the Guarantors party thereto and The Bank of New York, as
Trustee and a Registration Rights Agreement (the “7% Notes Registration Rights
Agreement”), dated as of February 16, 2005, by and among the Company, the
Guarantors party thereto and Banc of America Securities LLC, as Representative
of the several Purchasers. The 8-3/8%
Notes were issued as additional debt securities under an Indenture (the “8-3/8%
Indenture” and, together with the 7% Indenture, the “Indentures”) dated as
of November 19, 2003, by and among the Company, the Guarantors party thereto and
The Bank of New York, as Trustee, pursuant to which the Company previously
issued $540,000,000
aggregate principal amount of 8-3/8% Senior Subordinated Notes due 2014 (the
“Initial 8-3/8% Notes”). In connection with the issuance and sale of the 8-3/8%
Notes, the Company and the Guarantors
entered
into a Registration Rights Agreement (the “8-3/8% Notes Registration Rights
Agreement” and, together with the 7% Notes Registration Rights Agreement, the
“Registration Rights Agreements”), dated as of February 16, 2005, by and among
the Company, the Guarantors party thereto and Banc of America Securities LLC, as
Representative of the several Purchasers.
The terms
of the 7% Notes are governed by the 7% Indenture. The 7% Notes will mature on
February 15, 2015. Interest on the 7% Notes accrues at the rate of 7% per annum,
payable semiannually in cash in arrears on each February 15 and August 15,
commencing on August 15, 2005. The 7% Notes are jointly and severally guaranteed
on an unsecured senior basis by each of the Company’s current and future
restricted subsidiaries that is or becomes a guarantor under its new credit
facility. The 7% Notes are unsecured senior obligations of the Company, rank
equally with all of its existing and future senior indebtedness and rank senior
to all of its existing and future senior subordinated and subordinated
indebtedness. The Company may redeem some or all of the 7% Notes at its option
at any time after February 15, 2010, at redemption prices equal to (i) 103.500%
if redeemed during 2010, (ii) 102.333% if redeemed during 2011, (iii) 101.167 if
redeemed during 2012 and (iv) 100.000% if redeemed during 2013 or thereafter,
plus, in each case, accrued and unpaid interest, if any, to the redemption date.
At any time prior to February 15, 2008, the Company may redeem up to 35% of the
aggregate principal amount of the 7% Notes with the net cash proceeds of certain
equity offerings of its common stock at a redemption price of 107% of the
principal amount of the 7% Notes plus accrued and unpaid interest, if any, to
the redemption date, so long as (1) at least 65% of the original aggregate
amount of the 7% Notes remains outstanding after each such redemption and (2)
any such redemption is made within 60 days of such public equity
offering.
The terms
of the 8-3/8% Notes are governed by the 8-3/8% Indenture. The 8-3/8% Notes will
mature on January 15, 2014. Interest on the 8-3/8% Notes accrues at the rate of
8-3/8% per annum, payable semiannually in cash in arrears on each January 15 and
July 15, commencing on July 15, 2005. The 8-3/8% Notes are jointly and severally
guaranteed on an unsecured senior subordinated basis by each of the Company’s
current and future restricted subsidiaries that is or becomes a guarantor under
its new credit facility. Each Guarantor’s guarantee of the 8-3/8% Notes ranks
junior to such Guarantor’s guarantee of the Company’s previously issued Senior
Subordinated Discount Notes Due 2009 (the “16% Notes”). The 8-3/8% Notes are
unsecured senior subordinated obligations of the Company, rank junior to all of
its existing and future senior indebtedness (including for this purpose, the
currently outstanding 16% Notes), rank equally with all of its existing and
future senior subordinated indebtedness (excluding for this purpose its
currently outstanding 16% Notes) and rank senior to all of its future
subordinated indebtedness. The Company may redeem some or all of the 8-3/8%
Notes at any time after January 15, 2009, at redemption prices equal to (i)
104.188% if redeemed during 2009, (ii) 102.792% if redeemed during 2010, (iii)
101.396 if redeemed during 2011 and (iv) 100.000% if redeemed during 2012 or
thereafter, plus, in each case,
accrued
and unpaid interest, if any, to the redemption date. At any time prior to
January 15, 2007, the Company may redeem up to 35% of the combined aggregate
principal amount of the 8-3/8% Notes and the Initial 8-3/8% Notes with the net
cash proceeds of certain equity offerings of its common stock at a redemption
price of 108.375% of the principal amount thereof plus accrued and unpaid
interest, if any, to the redemption date so long as (1) at least 65% of the
combined aggregate principal amount of the 8-3/8% Notes and the Initial 8-3/8%
Notes remains outstanding after each such redemption and (2) any such redemption
by the Company is made within 60 days of such public equity
offering.
The
Indentures contain certain covenants that, subject to a number of important
exceptions and qualifications, limit, among other things, the Company’s ability
and the ability of its restricted subsidiaries to incur additional indebtedness,
create liens, make investments, enter into transactions with affiliates, sell
assets, guarantee indebtedness, declare or pay dividends or other distributions
to shareholders, repurchase equity interests, redeem debt that is junior in
right of payment to the applicable series of Notes, enter into agreements that
restrict dividends or other payments from subsidiaries, issue or sell capital
stock of certain of its subsidiaries, and consolidate, merge or transfer all or
substantially all of the Company’s assets and the assets of its subsidiaries on
a consolidated basis. In addition, if the Company experiences specific kinds of
changes in control, holders of the Notes will have the right to require the
Company to purchase their Notes, in whole or in part, at a price equal to 101%
of the principal amount, together with any accrued and unpaid interest to the
date of such purchase.
The terms
of the Registration Rights Agreements grant the holders of each series of Notes
certain exchange and registration rights. Under the Registration Rights
Agreements, the Company agreed to use its reasonable efforts to file a
registration statement within 150 days after the issue date of the Notes,
enabling note holders to exchange either series of Notes for publicly registered
notes with substantially identical terms, referred to herein as exchange notes,
cause the registration statement to become effective within 210 days after the
issue date of the Notes, effect an exchange offer for each series of Notes for
exchange notes within 240 days after the issue date of the Notes, and file a
shelf registration statement for the resale of the Notes if the Company cannot
effect the exchange offers within the time periods listed above and in certain
other circumstances. The Company agreed to pay additional interest if it does
not comply with the foregoing obligations.
New
Credit Facility
Also on
February 16, 2005, the Company established a $250,000,000 revolving credit
facility (the “New Credit Facility”). The proceeds of the offering of the Notes
and initial borrowings under the New Credit Facility were used to repay all
outstanding borrowings and terminate the Company’s previous credit facility
established pursuant to a Credit Agreement (the “1999 Credit Agreement”), dated
as of November 9, 1999, as amended and restated as of January 12, 2002 and March
26, 2003, as further amended by the First Amendment to such Credit Agreement
dated as of July 2, 2003 and the Amendment No. 2 to such Credit Agreement dated
as of July 2, 2003 and as further amended and restated as of November 17, 2003,
by and among the Company and BCSI, Inc., a Delaware Corporation, as Borrowers,
the Initial Lenders, the Initial Issuing Banks and Swing Line Banks named
therein, Bank of America, N.A., as Syndication Agent, Citicorp USA, Inc., as
Administrative Agent, Credit Suisse First Boston and The Bank of New York, as
Co−Documentation Agents, PNC Bank, N.A., together with Credit Suisse First
Boston and The Bank of New York, as Co-Arrangers, Citigroup Global Markets Inc.
and Banc of America Securities LLC, as Joint Lead Arrangers and Joint Book
Managers and Banc of America Securities LLC, Credit Suisse First Boston and
Goldman Sachs Credit Partners L.P., as Joint Lead Arrangers and Joint
Book-Running Managers for the Term D Facility.
In
connection with the establishment of the New Credit Facility, the Company
entered into a Credit Agreement (the “New Credit Agreement”), dated as of
February 16, 2005, by and among the Company, as Borrower, the Guarantors party
thereto, Bank of America, N.A., as Administrative Agent, PNC Bank, National
Association, as Swingline Lender, Banc of America Securities LLC and Credit
Suisse First Boston, as Joint Lead Arrangers and Joint Book Managers and the
other Lenders party thereto. The New Credit Agreement consists of the New Credit
Facility, which includes a $40,000,000 sublimit for the issuance of standby
letters of credit and a $25,000,000 sublimit for swingline loans. Borrowings
under the New Credit Facility (other than swingline loans) bear interest, at the
Company’s election, at a rate per annum equal to (i) LIBOR plus the Applicable
Margin (as defined below) or (ii) the Base Rate (as defined below) plus the
Applicable Margin. Swingline loans bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin for base rate advances. The “Applicable
Margin”
is a percentage per annum equal to (i) for the period from the date of the
initial borrowings under the New Credit Facility through the date on which the
Company delivers financial statements for the fiscal quarter ending March 31,
2005 to the Administrative Agent under the New Credit Facility, (A) 2.00%, in
the case of LIBOR rate advances, and (B) 1.00%, in the case of alternate Base
Rate advances, and (ii) thereafter, a percentage to be determined in accordance
with a performance pricing grid based upon the Company’s total leverage ratio.
The “Base Rate” is equal to the higher of (x) the Bank of America, N.A. prime
rate and (y) the Federal Funds Rate plus one-half of one percent.
The New
Credit Facility will terminate and be payable in full five years after the
initial borrowings thereunder. However, notwithstanding the foregoing, if by the
date that is six months prior to the maturity of the 16% Notes (the “Accelerated
Maturity Date”) the Company does not refinance, repay or extend the maturity
date of its 16% Notes to a date later than the maturity of the New Credit
Facility, then the commitments of the lenders under the New Credit Facility will
terminate and any outstanding borrowings thereunder will become due and payable
on such Accelerated Maturity Date. The New Credit Facility permits voluntary
prepayments of the outstanding borrowings and voluntary, irrevocable reductions
of the unutilized portion of the commitments thereunder, in whole or in part at
any time and without premium or penalty, subject to certain conditions
pertaining to minimum notice and minimum payment/reduction amounts and to
reimbursement of customary breakage costs with respect to the prepayment of
LIBOR borrowings. Under the New Credit Agreement, the Company is required to pay
(i) commitment fees to the lenders on the undrawn portions of their commitments
quarterly in arrears accruing at 50 basis points on the unused amount of
commitments under the New Credit Facility, (ii) letter of credit fees on the
maximum amount available to be drawn under all outstanding letters of credit in
an amount equal to the Applicable Margin on LIBOR rate advances under the New
Credit Facility on a per annum basis, payable quarterly in arrears and (iii)
customary fronting fees for the issuance of letters of credit.
The New
Credit Facility is guaranteed by various of the Company’s existing and
future direct and indirect domestic subsidiaries, excluding specifically
however, Cincinnati Bell Telephone Company LLC and its Cincinnati Bell Extended
Territories LLC subsidiary, the Company’s Mutual Signal subsidiaries and, for so
long as the Company does not own all of its outstanding equity or membership
interests, Cincinnati Bell Wireless LLC. The Company’s obligations under the New
Credit Facility are secured by perfected first priority pledges and security
interests in (1) 100% of all present and future shares of capital stock or other
equity, membership or profit interests owned directly by the Company or any
Guarantor in the Company’s present and future domestic subsidiaries (other than
its Mutual Signal subsidiaries and, for so long as the Company does not own all
of its outstanding equity or membership interests, Cincinnati Bell Wireless LLC
(although the New Credit Facility is secured by a pledge of the Company’s
membership interest in Cincinnati Bell Wireless Holdings LLC, the direct owner
of the Company’s 80.1% interest in Cincinnati Bell Wireless LLC, a special
purpose holding company whose ability to incur liabilities or engage in
activities will be limited)), (2) 66% of all present and future shares of
capital stock or other equity, ownership or profit interests owned directly by
the Company or any Guarantor in its present and future direct first-tier foreign
subsidiaries, (3) certain of the Company’s and each Guarantor’s other personal
property and assets, to the extent perfection is effected by the filing of a UCC
financing statement and other appropriate notice filings with the U.S. Copyright
Office and the U.S. Patent and Trademark Office, (4) all present and future
intercompany debt owing from any non-guarantors to the Company or any Guarantor
under the New Credit Facility and (5) all proceeds of the
foregoing.
The New
Credit Facility contains financial covenants that require the Company to
maintain certain debt to EBITDA, senior secured debt to EBITDA, fixed charge and
interest coverage ratios. The New Credit Facility will also contain restrictive
covenants that, among other things, limit the Company’s ability to incur
additional debt or liens, pay dividends, repurchase its common stock, sell
assets, make investments and merge with another company. The New Credit Facility
provides for events of default customary to facilities of its type, including
non-payment of principal, interest or other amounts, incorrectness of
representations and warranties in any material respect, violation of covenants,
cross-events of default and cross-acceleration, certain events of bankruptcy or
insolvency, certain material judgments, invalidity of any loan or security
document, change of control and certain ERISA events.
The above
summary of the Indentures, Registration Rights Agreements and Credit Agreement
is qualified in its entirety by reference to the complete terms and provisions
of the Indentures, Registration Rights Agreements and New Credit
Agreement.
Item
1.02 Termination of a Material Definitive Agreement.
The
information included in Item 1.01 of this Current Report with respect to the
termination of the 1999 Credit Agreement is incorporated by reference into this
Item 1.02.
Item
2.03 Creation of a Direct Financial Obligation of a
Registrant.
The
information included in Item 1.01 of this Current Report is incorporated by
reference into this Item 2.03.
Item
3.03 Material Modification to Rights of Security Holders.
The
information included in Item 8.01 of this Current Report with respect to the
First Supplemental Indenture relating to the Company's 7-1/4% Senior Notes due
2013 is incorporated by reference into this Item 3.03.
Item
8.01 Other Events.
On
February 16, 2005, upon consummation of the issuance and sale of the Notes and
the establishment of the New Credit Facility, the First Supplemental Indenture
relating to the Company’s 7-1/4% Senior Notes due 2013 and the Fourth
Supplemental Indenture relating to the Company’s 16% Notes, each filed as
exhibits to the Company’s Current Report on Form 8-K dated February 2, 2005,
became effective.
Item 9.01
Financial Statements and Exhibits.
(c) Exhibits
|
Exhibit |
|
Description |
|
4.1 |
|
Indenture,
dated as of February 16, 2005, by and among Cincinnati Bell Inc., the
Guarantors party thereto and The Bank of New York, as
Trustee |
|
4.2 |
|
7%
Notes Registration Rights Agreement, dated as of February 16, 2005, by and
among Cincinnati Bell Inc., the Guarantors party thereto and Banc of
America Securities LLC, as Representative of the several Purchasers
|
|
4.3 |
|
8-3/8%
Notes Registration Rights Agreement, dated as of February 16, 2005, by and
among Cincinnati Bell Inc., the Guarantors party thereto and Banc of
America Securities LLC, as Representative of the several
Purchasers |
|
10.1 |
|
Credit
Agreement, dated as of February 16, 2005, by and among Cincinnati Bell
Inc., the Guarantors party thereto, Bank of America, N.A., as
Administrative Agent, PNC Bank, National Association, as Swingline Lender,
Banc of America Securities LLC and Credit Suisse First Boston, as Joint
Lead Arrangers and Joint Book Managers and the other Lenders party
thereto |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CINCINNATI
BELL INC. |
| |
|
| |
By: |
/s/
Christopher J. Wilson |
| |
|
Christopher
J. Wilson |
| |
|
Vice
President and General Counsel |
| |
|
Date |
February 23,
2005 |
Exhibit
Index
|
Exhibit
No. |
|
Exhibit |
|
|
| |
|
|
|
4.1 |
|
Indenture,
dated as of February 16, 2005, by and among Cincinnati Bell Inc., the
Guarantors party thereto and The Bank of New York, as
Trustee |
|
4.2 |
|
Senior
Notes Registration Rights Agreement, dated as of February 16, 2005, by and
among Cincinnati Bell Inc., the Guarantors party thereto and Banc of
America Securities LLC, as Representative of the several Purchasers
|
|
4.3 |
|
Senior
Subordinated Notes Registration Rights Agreement, dated as of February 16,
2005, by and among Cincinnati Bell Inc., the Guarantors party thereto and
Banc of America Securities LLC, as Representative of the several
Purchasers |
|
10.1 |
|
Credit
Agreement, dated as of February 16, 2005, by and among Cincinnati Bell
Inc., the Guarantors party thereto, Bank of America, N.A., as
Administrative Agent, PNC Bank, National Association, as Swingline Lender,
Banc of America Securities LLC and Credit Suisse First Boston, as Joint
Lead Arrangers and Joint Book Managers and the other Lenders party
thereto |