Consolidated Communications and Fidium Fiber Finance Holdco are co-issuers in a $2 billion securitization of revenue from fiber network contracts, issuing series 2025-1, 2 and 3 notes through a master trust structure.
The transaction will issue nine classes of notes but can issue more if the new notes conform to certain conditions and get rating agency confirmation, according to Kroll Bond Rating Agency. All the notes have a final maturity date of May 2055.
While the series 2025-1 will offer variable rates an other rates to be determined, the series 2025-2 and 2025-3 will pay rates of 6.5%, KBRA. The rating agency assigned A- to the classes A1 and A2 of the 2025-1 series; BBB and BB- to the classes B and C of the 2025-1 series, respectively; A- and BBB to classes A2 and B of the 2025-2 series; and A- and BBB to classes A2 and B of the 2025-3 series.
The co-issuers will own, manage and operate fiber optic communication systems to deliver fiber optic data and IP-delivered voice services to residential, business and carrier customers within 17 markets and in 21 states, KBRA said. Also, the residential, business and carrier customers represented 37.2%, 32.8% and 30.0%, respectively, of revenue from the last 12 months.
Morgan Stanley is the transaction's sole structuring agent and lead bookrunner, according to KBRA.
In addition to credit enhancement from subordination, the deal will repay interest to noteholders after senior fees in order of seniority, KBRA said.
The structure also includes cash trap and cash sweep conditions. If the senior notes' debt service coverage ratio reaches 1.75x or less, then 50% of available funds will be deposited into the cash trap reserve account. If the leverage ratio is greater than either 9.50x and the sum of the leverage on the most recent closing date of 1.00x, then Consolidated will use all available funds to repay all classes of notes in alphanumeric order.
Also, if the senior debt service coverage ratio falls below 1.50x, that will trigger an amortization period.
Drivetrain Agency Services will service the notes, according to KBRA.
