Hawaiian Telcom (Nasdaq: HCOM) has secured a $300 million term loan, a move that will enable the service provider to save $6 million in annual interest costs while paying off its existing debt.
"This will take our borrowing costs down by 200 basis points so we're going 7 to 5 percent, which will save us $6 million a year in terms of overall borrowing costs," said Robert Reich, CFO of Hawaiian Telcom during the recent Stephens Spring Investment Conference.
Proceeds from the loan, in addition to $5 million of existing cash, will be used to pay off pay off its outstanding term loan, a prepayment penalty, closing costs and other related third-party expenses.
Credit Suisse Securities (USA) LLC was Sole Lead Arranger and Sole Bookrunner for the new loan.
The refinancing comes at a time when Hawaiian Telcom is aggressively expanding its IPTV and broadband base throughout Hawaii.
By next year, the telco plans to extend 25 Mbps broadband service and IPTV to about 250,000 homes on the island Oahu. By the end of June, it said it will reach 100,000 homes with these services.
Reich said that for 50,000 households it costs about $500 to wire each home with broadband and about $20 million of its annual capex is being used to expand the reach of the broadband network.
Thus far, the service provider is making progress meeting its goals.
In Q1, Hawaiian Telcom enabled 18,000 households with 25 Mbps broadband, ending the quarter with a total of 83,000 households enabled. In Q2, it hopes to enable another 17,000 homes with broadband service.
For more:
- see the release
Special report: Grading the top 13 wireline service providers in Q1 2013
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