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SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
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                AVALON CABLE OF MICHIGAN, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
   On November 6, 1998, Avalon Michigan LLC became a co-borrower along with
Avalon New England and Avalon Finance, affiliated companies, collectively
referred to as the ("Co-Borrowers") on a $320,888 senior credit facility, which
includes term loan facilities consisting of (i) tranche A term loans of
$120,888 and (ii) tranche B term loans of $170,000, and a revolving credit
facility of $30,000 (collectively, the "Credit Facility"). Subject to
compliance with the terms of the Credit Facility, borrowings under the Credit
Facility will be available for working capital purposes, capital expenditures
and pending and future acquisitions. The ability to advance funds under the
tranche A term loan facilities terminated on March 31, 1999. The tranche A term
loans are subject to minimum quarterly amortization payments commencing on
January 31, 2001 and maturing on October 31, 2005. The tranche B term loans are
scheduled to be repaid in two equal installments on July 31, 2006 and October
31, 2006. The revolving credit facility borrowings are scheduled to be repaid
on October 31, 2005.
 
   On November 6, 1998, Avalon Michigan LLC borrowed $265,888 under the Credit
Facility in order to consummate the Merger. In connection with the Senior
Subordinated Notes (as defined below) and Senior Discount Notes (as defined
below) offerings, Avalon Michigan LLC repaid $125,013 of the Credit Facility,
and the availability under the Credit Facility was reduced to $195,000. Avalon
Michigan LLC had borrowings of $11,300 and $129,575 outstanding under the
tranche A and tranche B term note facilities, respectively, and had available
$30,000 for borrowings under the revolving credit facility. Avalon New England
and Avalon Finance had no borrowings outstanding under the Credit Facility at
December 31, 1998.
 
   The interest rate under the Credit Facility is a rate based on either (i)
the base rate (a rate per annum equal to the greater of the Prime Rate and the
Federal Funds Effective Rate plus 1/2 of 1%) or (ii) the Eurodollar rate (a
rate per annum equal to the Eurodollar Base Rate divided by 1.00 less the
Eurocurrency Reserve Requirements) plus, in either case, the applicable margin.
As of December 31, 1998, the applicable margin was (a) with respect to the
tranche B term loans was 2.75% per annum for Base Rate loans and 3.75% per
annum for Eurodollar loans and (b) with respect to tranch A term loans and the
revolving credit facility was 2.00% per annum for Base Rate loans and 3.00% for
Eurodollar loans. The applicable margin for the tranche A term loans and the
revolving credit facility are subject to performance based grid pricing which
is determined based on upon the consolidated leverage ratio of the Co-
Borrowers. The interest rate for the tranche B term loans outstanding at
December 31, 1998 was 9.19%. Interest is payable on a quarterly basis. Accrued
interest on the borrowings under the credit facility was $1,389 at December 31,
1998.
 
   The Credit Facility contains restrictive covenants which among other things
require the Co-Borrowers to maintain certain ratios including consolidated
leverage ratios and the interest coverage ratio, fixed charge ratio and debt
service coverage ratio.
 
   The obligations of the Co-Borrowers under the Credit Facility are secured by
substantially all of the assets of the Co-Borrowers. In addition, the
obligations of the Co-Borrowers under the Credit Facility are guaranteed by
Michigan Holdings, Avalon Cable LLC, Avalon Cable Finance Holdings, Inc.,
Avalon Cable of New England Holdings, Inc. and Avalon Cable Holdings, LLC.
 
   A Change of Control as defined under the Credit Facility agreement would
constitute an event of default under the Credit Facility giving the lender the
right to terminate the credit commitment and declare all amounts outstanding
immediately due and payable.
 
   Subordinated Debt
 
   In December 1998, the Company became a co-issuer of a $150,000 principal
balance, Senior Subordinated Notes ("Subordinated Notes") offering and Michigan
Holdings became a co-issuer of a $196,000, gross proceeds, Senior Discount
Notes (defined below) offering. In conjunction with these financings, the
Company
 
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