On
January 23, 2009, Embarq Corporation (“Embarq”) announced that it had entered
into Amendment No. 1 to its Credit Agreement dated as of May 10, 2006 (the
“Credit Agreement”), among Embarq, the lenders named therein and Citibank, N.A.,
as administrative agent. Amendment No. 1 will become effective only
upon the consummation of the merger between a subsidiary of CenturyTel, Inc.
(“CenturyTel”) and Embarq (the “Merger”), and the satisfaction of other
conditions specified in Amendment No. 1.
Amendment
No. 1 effects a waiver of the event of default that would have arisen under
the Credit Agreement solely as a result of the consummation of the Merger.
Further, subject to the consummation of the Merger and the satisfaction or
waiver of the other conditions specified therein, Amendment No. 1 will
effect certain modifications to the covenants regarding transactions with
affiliates and mergers set forth in the Credit Agreement, will add a new
covenant restricting the ability of Embarq to pay dividends to CenturyTel in the
event of a default under the Credit Agreement, will add a new covenant limiting
the ability of Embarq to guarantee debt of persons other than its subsidiaries,
will modify the financial covenants to provide for a lower leverage ratio, and
will effect certain other changes that will facilitate integration of Embarq and
its subsidiaries with CenturyTel and its subsidiaries following the consummation
of the Merger. Embarq has filed a Current Report on Form 8-K dated
January 23, 2009 that further describes Amendment No. 1 (the “Embarq
8-K Report”).
Previously,
in connection with the Merger Agreement dated October 26, 2008, CenturyTel
had entered into a commitment letter dated October 26, 2008 (the
“Commitment Letter”), among CenturyTel, Banc of America Bridge LLC, Banc of
America Securities LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC,
Barclays Capital, SunTrust Bank and SunTrust Robinson Humphrey,
Inc., which provided for a $800,000,000 bridge facility that would be
available to, among other things, refinance borrowings under the Credit
Agreement in the event a waiver of the event of default under the Credit
Agreement arising from the consummation of the Merger could not have been
obtained and other financing was unavailable. The Commitment Letter provided
that, in the event such a waiver or any such other financing were obtained, the
aggregate principal amount of the bridge facility would reduce by the amount of
loans and unused commitments under the Credit Agreement. In connection with
approval by the lenders of Amendment No. 1, Embarq has waived the
obligation of CenturyTel under the Merger Agreement to use its reasonable best
efforts to arrange financing on the terms and conditions described in the
Commitment Letter. On January 23, 2009, CenturyTel provided a
written notice terminating the Commitment Letter.
The
foregoing summary of Amendment No. 1 is qualified in its entirety by
reference to the full text thereof, which is filed as an exhibit to the Embarq
8-K Report.
Forward
Looking Statements
Except
for the historical and factual information contained herein, the matters set
forth in this document, including statements as to the expected benefits of the
acquisition or amended credit facility, and other statements identified by words
such as “estimates,” “expects,” “projects,” “plans,” and similar expressions are
forward-looking statements within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks and uncertainties that may cause
actual results to differ materially, including changes in the credit markets or
CenturyTel’s capital requirements, receipt of required approvals by regulatory
agencies, and other risk factors relating to the communications industry as
detailed from time to time in each of CenturyTel’s and Embarq’s reports filed
with the Securities and Exchange Commission. There can be no
assurance regarding the timing or the consummation of the Merger or that
Amendment No. 1 will take effect. You should not place undue
reliance on these forward-looking statements, which speak only as of the date of
this report. Unless legally required, CenturyTel and Embarq undertake
no obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.