Lumos agrees $425m refinancing

The fibre optic network service provider will use proceeds from a new facility to pay off debt relating to its 2011 spin-off from NTELOS.

Quadrangle Group portfolio company Lumos Networks has taken out a $425 million credit facility to pay off outstanding debts related to the company’s 2011 spin-out, the company announced in a statement.

The credit facility includes a $100 million senior secured five year term loan, a $275 million senior secured six year term loan and a $50 million senior secured five year revolving credit facility.

The company’s new term loans are priced at LIBOR plus 3 percent and LIBOR plus 3.25 percent, respectively. The weighted, blended interest rate for the company is expected to decrease from 3.8 percent to 3.5 percent, according to a statement.

Fibre optic network service provider Lumos spun out of its parent company, NTELOS, in 2011. To finance that spinout, Lumos borrowed $340 million under a senior secured credit facility and used $315 million to pay a subsidiary of NTELOS. The company’s outstanding indebtedness under that facility was $311 million as of 31 December, according to a 10-K document filed with the US Securities and Exchange Commission.

Proceeds from the two term loans will be used to retire approximately $311 million of that first lien credit facility, and to pay closing costs and other expenses connected to the refinancing, the company said in its 8-K. 

“The completion of our debt refinancing represents a key milestone in the continued transformation of Lumos Networks and helps to set the stage for the next phase of growth of our Strategic Data products over our expanding and dense regional fiber network,” said Lumos chief executive Tim Biltz in a statement.

Quadrangle funds, which had retained their stake in NTELOS after that company held an initial public offering in February, held a 27 percent stake in Lumos at the time of the spinout, according to documents obtained through the Federal Communications Commission.

The firm lists Lumos as a portfolio company on its website. Quadrangle president and managing partner Michael Huber sits on the company’s board of directors.

Huber and a spokesman for Lumos could not be reached for comment at press time.

Quadrangle specialises in information and communications technology investments. The New York-based private equity firm’s $2 billion 2005 vintage had generated a 6.15 percent internal rate of return as of 30 September, according to California State Teachers’ Retirement System documents.