U.S. LEC restructures debt

US LEC announced today that it has restructured its debt in such a way that it is now fully funded.

The company announced last year that it would run into a funding gap toward the end of 2003. By restricting its debt the company has eliminated that gap.

US LEC now has the financing to get itself to the point in its growth where it will generate enough cash to meet capital expenditure demands, operating needs and make debt payments, according to Michael Robinson, US LEC’s chief financial officer,.

Unlike other restructuring deals, many of which have included a debt exchanges, US LEC’s restructuring arrangement doesn’t reduce the company’s debt load, except for an $8 million principal payment that was submitted at closing. Instead it pushes back payment schedules on much of the company $128 million in debt.

For example, $30 million of term loan principle payments have been deferred from 2003-2004 to 2005-2006, and a $25 million principal payment on the company’s revolving credit facility has been moved from 2005 to 2006.

"We made $22 million of principal payments in 2002," Robinson said. "What we asked the banks to do was to give us a little more time and just let us grow a little."

The deal also included a $5 million investment led by company chairman Richard Aab, which comes in the form of 11% subordinated notes maturing 2007.