Summary of OTELCO INC. - Yahoo! Finance

Entry into a Material Definitive Agreement, Results of Operations and Financial Condi

Item 1.01. Entry into a Material Definitive Agreement.

On January 31, 2013, Otelco Inc. ("Otelco") and each of its direct and indirect subsidiaries (together with Otelco, the "Company") entered into a Restructuring Support Agreement (the "Support Agreement") with:

• lenders (the "Consenting Term Loan Lenders") representing all of the outstanding principal term loan obligations under that certain Second Amended and Restated Credit Agreement, dated as of October 20, 2008 (the "Credit Agreement"), by and among Otelco, as borrower, the other credit parties signatory thereto, as credit parties, the lenders signatory thereto from time to time, as lenders, General Electric Capital Corporation (the "Agent"), as administrative agent, agent and lender, GE Capital Markets, Inc., as lead arranger and sole bookrunner, and CoBank, ACB, as co-lead arranger and lender; and

• lenders (the "Consenting Revolving Loan Lenders" and, together with the Consenting Term Loan Lenders, the "Plan Support Parties") representing all of the revolving loan commitments under the Credit Agreement.

Pursuant to the Support Agreement, the Company and the Plan Support Parties have agreed to support and consummate a restructuring (the "Restructuring") of the Company's outstanding obligations under (a) the Credit Agreement, (b) Otelco's 13% Senior Subordinated Notes due 2019 (the "Notes") and (c) that certain Indenture, dated as of December 21, 2004, as supplemented on July 3, 2006, July 5, 2007, October 31, 2008, June 8, 2010, October 1, 2011 and October 14, 2011 (the "Indenture"), among Otelco, the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee, which governs the Notes.

Pursuant to the Support Agreement, the Company has also agreed, among other things, to (a) commence a solicitation for acceptances of a prepackaged chapter 11 plan of reorganization (the "Plan") for the Company in accordance with the terms of the Support Agreement and the term sheet (the "Term Sheet") attached thereto (the "Solicitation") by no later than February 14, 2013, (b) commence reorganization cases (the "Chapter 11 Cases") for the Company by filing voluntary petitions under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") as soon as practicable after the completion of the deadline to submit votes to accept or reject the Plan pursuant to the Solicitation, and, in any event, no later than April 3, 2013 (the date on which the Chapter 11 Cases are commenced, the "Petition Date"), (c) file and seek approval on an interim and final basis by the Bankruptcy Court of certain motions (including a motion seeking consensual use of cash pledged as collateral to the lenders under the Credit Agreement and providing adequate protection to those lenders in connection therewith), (d) seek confirmation of the Plan and approval of the disclosure statement that will be used in connection with the Solicitation (the "Disclosure Statement") at the earliest practicable date, which, in any event, may not be later than 70 days after the Petition Date, (e) not take any action not otherwise required by law that is inconsistent with the Support Agreement, the Plan and the Term Sheet, (f) not, nor encourage any other person or entity to, interfere with, delay, impede, appeal or take any other negative action, directly or indirectly, in any respect regarding the Term Sheet or the overall Restructuring, (g) prior to the effective date of the Restructuring, not make any cash payments to the holders of the Notes on account of the obligations evidenced by the Notes or to any holders of any equity interests in the Company,
(h) promptly notify the Agent and deliver to the Agent any expressions of interest, letters of intent or any proposals received from a potential acquirer with respect to any proposed restructuring alternative that the board of directors of Otelco determines to be bona fide, based on adequate financial wherewithal and worthy of evaluation and (i) take any and all necessary and appropriate actions in furtherance of the Restructuring, including, but not limited to, taking all steps reasonably necessary and appropriate to obtain any and all required regulatory and/or third-party approvals for the Restructuring.

Pursuant to the Support Agreement, the Plan Support Parties have also agreed, among other things, to (a) vote in favor of the Plan and not change or withdraw (or cause to be changed or withdrawn) that vote, (b) at the sole cost of the Company, use their reasonable efforts to support confirmation of the Plan and approval of the Disclosure Statement, and not object to, or support any other person's efforts to oppose or object to, confirmation of the Plan, (c) at the sole cost of the Company, use their reasonable efforts to support (and not object to) the motions referred to in clause (c) of the preceding paragraph and other motions consistent with the Support Agreement filed by the Company in furtherance of the Restructuring, (d) refrain from taking any action that is materially inconsistent with, or that would materially delay or impede approval,

confirmation or consummation of, the Restructuring, the Plan or that is otherwise inconsistent with the terms of the Support Agreement and the Term Sheet and (e) not, directly or indirectly, propose, support, solicit, encourage or participate in the formulation of any restructuring for the Company, including any plan of reorganization or liquidation in the Chapter 11 Cases other than the Restructuring.

The failure to satisfy certain milestones set forth in the Support Agreement on or prior to certain dates specified in the Support Agreement may result in the termination of the Support Agreement. The milestones referred to in the preceding sentence include, among other milestones, a deadline of June 30, 2013 for substantially consummating the Restructuring, which deadline will be automatically extended by an additional 60 days if the Company has not obtained certain regulatory approvals necessary for the consummation of the Plan by that date and the requests for those approvals are still pending. The occurrence of certain other events set forth in the Support Agreement may also result in the termination of the Support Agreement. Such events include, among other events,
(a) any representation or warranty made by the Company in the Support Agreement being incorrect in any material respect and (b) a material adverse change occurring with respect to the financial condition, collateral, operations, business or prospects of the Company, taken as a whole. In addition, the Company may terminate the Support Agreement following a determination by the board of directors of Otelco or its subsidiaries that are parties to the Credit Agreement, following consultation with and receiving advice from outside counsel . . .

Item 8.01. Other Events.

On February 1, 2013, Otelco issued a press release announcing the execution of the Support Agreement and the expected commencement of the Solicitation. A copy of that press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On February 1, 2013, Otelco made available on the investor relations section of its website, at
http://phx.corporate-ir.net/phoenix.zhtml?c=184665&p=irol-irhome, a presentation relating to the Company's business and operations. A copy of that presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference. Otelco's website and the information contained on Otelco's website are not part of this Current Report on Form 8-K.

A copy of the Disclosure Statement, including the Exhibits thereto, is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

A copy of a letter that will be delivered to the holders of IDSs in connection with the Solicitation, and which will accompany the Disclosure Statement, is attached hereto as Exhibit 99.4 and is incorporated herein by reference.

Forward-Looking Statements

Statements in, or incorporated by reference into, this Current Report on Form 8-K that are not statements of historical or current fact constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could impact the Company's restructuring plans or cause the actual results of the Company to be materially different from the historical results of the Company or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks, uncertainties and other factors, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "plans" or similar terms to be uncertain and forward-looking. There can be no assurance that the Restructuring will be consummated. The forward-looking statements contained, or incorporated by reference, herein are also subject generally to other risks and uncertainties that are described from time to time in Otelco's filings with the Securities and Exchange Commission.