OKLAHOMA CITY, May 19, 2003 (PRIMEZONE) -- Dobson Communications Corporation (Nasdaq:DCEL) announced today that its majority shareholder, Dobson CC Limited Partnership (DCCLP) has closed on its agreement with Bank of America for the amendment and restructuring of DCCLP's loan. The agreement is a final resolution to the previously disclosed negotiations between DCCLP and Bank of America, and eliminates the change of control risk at Dobson Communications related to any possible future default on the DCCLP loan.
Under the new five-year loan agreement, the amount owed by DCCLP to Bank of America has been reduced to $60 million, at Bank of America's prime interest rate. Under the terms of the agreement, DCCLP will transfer 32.5 million shares of Dobson Communications Class A common stock to the Bank. Any future sale of these shares will be subject to a number of restrictions until May 2006. And, although the amended loan is secured in part by Dobson common stock, it is not a margin loan as defined by Regulation U.
After the transfer to the Bank, DCCLP will retain approximately 21 million shares of Dobson Communications common stock, including 19 million shares of Class B stock and 2 million shares of Class A stock. The 21 million retained shares represent approximately 65 percent of the voting power of all outstanding common stock of Dobson Communications, giving effect to all options that could be exercised in the next 60 days.
Dobson's Class B stock has superior voting rights to its Class A common stock. As of March 31, 2003, the Company had approximately 91.8 million common shares outstanding,
Of the approximately 21 million shares that DCCLP retains, the Bank has released 10 million shares of Class B stock from the collateral on the restructured loan. The Bank will no longer have any recourse against DCCLP shares that are necessary to be held by DCCLP to prevent a change of control under the documents governing Dobson Communications' senior notes and preferred stock, even in the event of a subsequent default on the restructured loan. The released shares provide DCCLP with ownership and voting power substantially in excess of that required to be retained by DCCLP to avoid any change of control risk under credit agreements, indentures and preferred stock agreements to which Dobson Communications and its subsidiaries are parties.
The Bank has also released all guarantors of the loan and has no recourse against any of the partners of DCCLP, including its general partner, RLD, Inc., in the event of a future default.
Under the restructured loan agreement, DCCLP has agreed not to pledge or otherwise encumber any of the 10 million shares of Class B common stock that the bank has released as collateral.
The $60 million restructured loan is secured by all of DCCLP's remaining assets, including the additional 9 million shares of Class B and 2 million shares of Class A common stock. DCCLP has advised Dobson Communications that the collateral for the restructured loan, exclusive of shares of Dobson Communications' common stock, is expected to provide sufficient cash flows to service the restructured loan prior to its maturity. As with the predecessor loan, Dobson Communications is not a party to nor a guarantor of the restructured loan.
Bank of America has entered into a lock-up agreement with DCCLP and Dobson Communications covering the 32.5 million shares of Dobson Communications' common stock that it will acquire from DCCLP. The lock-up agreement will continue until May 2006 and will preclude the Bank from selling its Dobson stock, except in certain circumstances. The Bank may sell in private transactions up to 4 million shares prior to May 16, 2004; however, these shares are not freely tradeable and may not be sold unless they are registered with the SEC or if an exemption from such registration is available.
In addition, the lock-up agreement would allow the Bank to sell Dobson shares only in certain circumstances, including in private placements or other transactions that are exempt from the registration requirements of the Securities Act of 1933; in connection with any business combination involving Dobson Communications; in registered public offerings; under Rule 144 at anytime after May 16, 2004; in any transaction that occurs after May 16, 2004 for a price equal to or greater than $10 per share; or in certain other transactions in which DCCLP is also a seller of stock.
If at some point the Dobson Communications board of directors were to approve a change of control event for the Company and DCCLP agrees to participate in the change of control event, the Bank has committed to vote its shares in favor of the board's decision, subject to certain price thresholds.
The Bank will release its lien on an additional 1.5 million Class B shares that are collateral for the restructured loan if, prior to May 16, 2004, the Bank sells the allowed 4 million shares of its Dobson Communications common stock, or if DCCLP introduces to the Bank a prospective purchaser of the 4 million shares, subject, in either case, to price thresholds.
In addition, if the Bank has sold the 4 million shares by May 16, 2004, and then if the Bank sells another 6 million shares by May 16, 2006, then the Bank will release its lien on an additional 1 million Class B shares from the collateral.
Finally, the Bank has entered into a separate agreement with a significant Dobson Communications shareholder that is not affiliated with DCCLP. Under this separate agreement, the Bank is further restricted until May 2006 from selling shares in private placements or other transactions that are exempt from the registration requirements of the Securities Act of 1933, except for up to 4 million shares that may be sold in a private transaction prior to May 16, 2004, and sales after May 16, 2004 under Rule 144. This additional lock-up agreement automatically terminates if the significant shareholder's stock ownership in Dobson Communications falls below a certain level.
Dobson Communications is a leading provider of wireless phone services to rural markets in the United States. Headquartered in Oklahoma City, Dobson serves markets in 17 states. For additional information on the Company and its operations, please visit its Web site at www.dobson.net.