Otelco enters into credit agreement to finance acquisition of Country Road Communications



    ONEONTA, AL, Oct. 20 /CNW/ - Otelco Inc. (NASDAQ:   OTT; TSX: OTT.un) today
announced it has entered into an amended and restated credit agreement.
Substantially all of the net proceeds from the amended credit agreement will
be used to finance the acquisition of the three subsidiaries of Country Road
Communications LLC announced on August 7, 2008. These three subsidiaries -
Pine Tree Holdings, Inc., Granby Holdings, Inc. and War Holdings, Inc. - serve
locations in Maine, Massachusetts and West Virginia, respectively. Funding of
the amended credit agreement is conditioned upon, among other things, the
concurrent closing of the Country Road acquisition. The amended credit
agreement will terminate on December 31, 2008 if all of the conditions to
funding have not been met by that date.
    The amendment expands Otelco's existing senior credit facility to
$188.5 million to fund the acquisition, including related transaction costs,
and includes the continuation of the existing $15 million revolver. The
Company's existing credit agreement will remain effective until funding occurs
under the amended credit agreement. GE Capital Markets, Inc. and CoBank, ACB
acted as lead arrangers for the financing and General Electric Capital
Corporation will serve as Agent for the lenders. CoBank, Raymond James Bank,
CIBC Inc., Union Bank of California and Webster Bank are the other
participating financial institutions.
    "We are excited to have executed a definitive credit agreement,
particularly in this time of unusual stress in the financial markets," said
Mike Weaver, President and CEO of Otelco. "This action reinforces the strong
continued commitment of Otelco's financing partners to the Company,
reinforcing our belief that this acquisition is good for Otelco, its
shareholders and the communities and customers we serve.
    "We have made significant progress in obtaining the necessary regulatory
approvals in order to acquire the Country Road properties and expect to
complete the transaction shortly, once all approvals are received," added
Weaver.

    
    Credit Agreement Overview:

    The credit facilities under the amended credit agreement are comprised
    of:

    -   term loans of $173,500,000, consisting of $64,646,968 that remained
        outstanding under the existing credit agreement, and an additional
        term loan of $108,853,032; and

    -   the continuation of a revolving loan commitment in an amount of up to
        $15,000,000.
    

    In July 2007, Otelco sold 3,000,000 additional Income Deposit Securities,
using the proceeds to reduce senior debt in preparation for this type of
additional acquisition opportunity.

    ABOUT OTELCO

    Otelco Inc., headquartered in Oneonta, Alabama, provides wireline
telephone services in Alabama, Maine and Missouri. The Company's services
include local and long distance telephone, network access, transport, digital
high-speed data and dial-up Internet access, cable television and other
telephone related services. With more than 70,000 voice and data access lines,
which are collectively referred to as access line equivalents, Otelco is among
the top 40 largest local exchange carriers in the United States based on
number of access lines. Otelco operates six incumbent telephone companies
serving rural markets, or rural local exchange carriers, each of which can
trace its history as a local telecommunications provider as far back as the
early 1900s. It also provides competitive telecommunications services through
several subsidiaries. For more information, visit the Company's web site at
www.OtelcoInc.com.

    FORWARD LOOKING STATEMENTS

    Statements in this press release that are not statements of historical or
current fact constitute forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties, and other unknown
factors that could affect the timing and/or availability of the financing
described herein, or the acquisition or the satisfaction of the conditions to
the financing or the acquisition, or cause the actual results of the Company
to be materially different from the historical results or from any future
results expressed or implied by such forward-looking statements. In addition
to statements which explicitly describe such risks and uncertainties, readers
are urged to consider statements labeled with the terms "believes", "belief,"
"expects," "intends," "anticipates," "plans," or similar terms to be uncertain
and forward-looking. The forward-looking statements contained herein are also
subject generally to other risks and uncertainties that are described from
time to time in the Company's filings with the Securities and Exchange
Commission.





For further information:

For further information: Curtis Garner, Chief Financial Officer, Otelco
Inc., (205) 625-3571, Curtis@otelcotel.com

Organization Profile

Otelco Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890