Otelco Inc. announced that it has executed new credit facilities totaling $105 million in the aggregate. Under the terms of a new senior loan agreement, Cerberus Business Finance, LLC will extend a new five year first lien term loan facility to Otelco in the aggregate principal amount of $85 million and also provide a new $5 million revolving credit facility, which will be undrawn at the time the term loan is funded. The first lien term loan bears interest at a rate equal to, at the company's option, either a reference rate plus an applicable margin equal to 5.50% or a LIBOR rate plus an applicable margin equal to 7.75%, with a 1.00% LIBOR floor.

In addition, NewSpring Mezzanine Capital III, L.P. will provide a new five and a half year senior subordinated term loan facility in the amount of $15 million. The senior subordinated term loan bears cash interest at 12.00% and paid-in-kind interest at 2.00%. The total borrowings, together with cash on hand, will be used to refinance the company's existing bank-syndicated credit facility, which is scheduled to mature on April 30, 2016.

The company's existing credit agreement will remain effective until funding occurs under the new credit facilities. Piper Jaffray & Co. served as the exclusive financial advisor and lead placement agent for the company in connection with the new credit facilities.