International law firm Dorsey & Whitney LLP announced today that it represented Otelco Inc. (Nasdaq:  OTEL), a wireline telecommunications provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia, in Otelco’s recently announced refinancing of its long-term debt.  Otelco refinanced its credit facilities with a new $92 million, five-year credit facility from a consortium of banks led by CoBank, ACB. The new facility includes an $87.0 million term loan and a $5.0 million revolving loan, which is undrawn.  Proceeds from the new term loan and cash on hand were used to repay Otelco’s previous term loans and fees associated with the transaction.  

The new facility reduces the effective interest rate on the Company’s debt by more than 400 basis points and supports Otelco’s continued focus on reducing leverage.  The lower interest rate is expected to reduce cash interest expense in 2018 by more than $3.5 million compared with the former facilities. The new credit facility allows the Company, subject to being in compliance with certain covenants, to pay dividends to its shareholders and redeem stock beginning in 2018.  The new facility also includes a $20.0 million accordion feature available over the life of the facility.

Dorsey Corporate Partner Steven Khadavi, who heads the Firm’s New York office, led the multi-office Dorsey team representing Otelco in the refinancing. Other principal members of the team included Minneapolis Finance & Restructuring Partner Michael Pignato, New York Corporate Partner Brian Rosenau, New York Finance & Restructuring Associate Hebba Aref and Minneapolis Finance & Restructuring Associate Maggie Carnahan.