SureWest Signs Favorable New Credit Agreement to Refinance Senior Notes and Current Agreement

Provides Flexibility to Continue Executing on Broadband Growth Strategy

Mar 02, 2011, 08:00 ET from SureWest Communications

ROSEVILLE, Calif., March 2, 2011 /PRNewswire/ -- SureWest Communications (Nasdaq: SURW) announced today the closing of its debt refinancing plan for an aggregate of $264 million.

Steve Oldham, SureWest's president and chief executive officer, said, "We are very pleased with the terms and cost of this refinancing, which will replace our existing debt and provide additional liquidity to allow us to continue our successful Broadband growth strategy over the next several years. This refinancing effort demonstrates the confidence our lenders have in the success of our business model and provides more clarity to our shareholders about our long-term capital structure.

"Our relatively low levels of debt provide us with significant flexibility as we execute our business plan. We are eager to continue our growth through network expansion, our wireless backhaul service offering to large carriers and other commercial opportunities with a goal of generating sustainable free cash flow and creating long-term value for our shareholders."

SureWest expects to continue investing in high-margin growth opportunities and prioritizing spending where it has experienced the greatest returns. This includes continued sales growth opportunities to businesses in the greater Sacramento and Kansas City regions, residential growth of its voice, video and data products, and increased residential subscriber penetration on its current networks.

Beginning in the second quarter of 2011, SureWest plans to pass 10,000 additional residential fiber marketable homes in Kansas City where it has experienced high penetration levels. The existing Kansas City hybrid fiber coaxial (HFC) network has 40% penetration levels and the 11,600 new fiber homes the company passed in 2009 in that region have already reached 34% penetration. SureWest has projected 2011 capital expenditures of $60-70 million and expects long-term growth prospects through the middle of 2013 to demand the same range of capital investment with an opportunity to build to over 30,000 additional homes in Kansas City.

Credit Agreement Details

The debt refinancing plan includes the issuance of $210 million in secured term loans and a $34 million secured revolving credit facility. The term loans consist of a $40 million Term Loan A facility at a fixed rate until converted to the Term Loan B facility on May 31, 2011, a $170 million Term Loan B facility and a delayed draw option of up to $20 million on the Term Loan B facility. In connection with the refinancing plan, SureWest will terminate its existing Series A and Series B Notes on or about March 14, 2011. These transactions were intentionally delayed to capture refinancing savings of approximately $1 million.

Borrowings under the new Credit Agreement will bear interest at the company's election based on LIBOR or a Base Rate plus an applicable margin related to the company's leverage ratio. The applicable margin ranges between 3.25% and 4.25% for LIBOR loans and between 2.25% to 3.25% for Base Rate loans. The $40 million Term Loan A facility will accrue interest at a fixed rate of 6.29% plus an applicable margin between 1.5% and 2.5% until it is converted to the Term Loan B facility on May 31, 2011.

Commencing on September 30, 2011 and on the last day of each quarter thereafter, the company is required to make quarterly amortization payments of $3.75 million on the Term Loan B facility. All amounts outstanding on the revolving loan facility and Term Loan B facility will be due on March 2, 2016.

As a result of the refinancing, SureWest incurred cash charges which were comprised of certain lender and arranger fees, prepayment penalties on the Senior Notes, as well as direct and incremental third party costs. Subject to final review of the accounting treatment, in the first quarter ending March 31, 2011, SureWest expects to record approximately $2.4 to $2.8 million in expenses related to the refinancing transaction, which primarily consist of early termination costs on the Series A and Series B Notes

Participants of the new Credit Agreement include: CoBank ACB as administrative agent, lead arranger, bookrunner, issuing lender, swingline lender and a lender; Royal Bank of Canada as syndication agent bookrunner, lead arranger and a lender; Union Bank, N.A. as documentation agent, lead arranger and a lender; and various other lenders.

The Form 8-K with the final agreement will be filed with the Securities and Exchange Commission in the next few days and will be available at www.surw.com under "SEC filings."

About SureWest

SureWest Communications (www.surewest.com) is a leading integrated communications provider and the bandwidth leader in the markets it serves. Headquartered in Northern California for more than 95 years, SureWest offers bundled residential and commercial services in the greater Sacramento and Kansas City regions that include IP-based digital and high-definition television, high-speed Internet, Voice over IP, and local and long distance telephone. SureWest was the nation's first provider to launch residential HDTV over an IP network and offers one of the nation's fastest symmetrical Internet services with speeds of up to 50 Mbps in each direction on its fiber-to-the-home network.

Safe Harbor Statement

Statements made in this news release that are not historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements may be identified by the use of words such as "may," "will," "should," "expect," "plan," "anticipate" or "project," or the negative of those words or other comparable words. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the company's actual results to differ from those projected in such forward-looking statements.

Important factors that could cause actual results to differ from those set forth in the forward-looking statements include, but are not limited to, advances in telecommunications technology, changes in the telecommunications regulatory environment, changes in the financial stability of other telecommunications providers who are customers of the company, changes in competition in markets in which the company operates, adverse circumstances affecting the economy in California, Kansas and Missouri in general, and in the greater Sacramento, California and greater Kansas City, Kansas and Missouri areas in particular, the availability of future financing, changes in the demand for services and products, new product and service development and introductions, and pending and future litigation.

Contact:

Ron Rogers

Corporate Communications

916-746-3123

r.rogers@surewest.com

Misty Wells

Investor Relations

916-786-1799

m.wells@surewest.com

SOURCE SureWest Communications



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