Represented by Jones Day lawyers in Atlanta, Birch Communications has completed a private debt offering, generating $60 million in capital for the company, which provides voice and broadband communications to small and mid-sized business customers.
Jones Day partner John E. Zamer led the team, which also included associates Todd M. Roach, Sarah E. Watts and Jason Peterson.
Zamer explained that Birch, which has been a client for several years, is what’s known as a CLEC—competitive local exchange carrier—providing phone and data services primarily over the Internet. It has operations in 32 states, numerous subsidiaries, and operates in a highly regulated industry.
“Those created challenges in just doing a conventional term loan financing,” he said.
The $60 million was made up of a working capital facility provided by Silicon Valley Bank, represented by lawyers from Riemer & Braunstein in Boston, and senior secured term financing from lenders including PennantPark Investment Corp. and TICC Capital Corp., represented by Bingham McCutchen in Boston and Hartford, Conn.
Birch has announced plans to close on an additional $15 million in debt capital in the coming months.
The placement agent for Birch’s senior secured notes offering was Knight Libertas LLC. Redwood Capital Group acted as financial adviser to Birch in connection with the senior secured notes offering.
This deal essentially replaced a larger plan Birch had announced in November. At that time, the company said in a press release that it planned to issue $100 million in senior secured notes due in 2015. That deal, Zamer said, did not get done.
“That was a more widely distributed notes offering,” Zamer said, explaining that the current deal is a private placement to a placement agent with note buyers. “This is just a handful of term lenders, so the nature of the offering really changed. Most of this was to repay outstanding debt and the rest is for acquisitions. I suspect these lenders will have the ability to lend us more money in the future.”