UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)March 1, 2006(February 28, 2006)
Global Signal Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-32168 65-0652634
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
301 North Cattlemen Road, Suite 300, Sarasota, Florida 34232
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (941) 364-8886
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The descriptions of the Mortgage Loan (defined below) and the
Management Agreement (defined below) set forth in Item 2.03 of this report are
incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
On February 28, 2006, three of Global Signal Inc.'s (the "Company")
wholly owned special purpose entities, Global Signal Acquisitions II LLC, Global
Signal Acquisitions LLC and Pinnacle Towers LLC (and its 13 subsidiaries) (the
"Borrowers") entered into an Amended and Restated Loan and Security Agreement
(the "Agreement"), between the Borrowers and Towers Finco III LLC, pursuant to
which the Borrowers borrowed approximately $1.55 billion and issued notes made
payable to a newly formed trust (the "Mortgage Loan"). The trust simulataneously
issued $1.55 billion in commercial mortgage pass-through certificates with terms
similar to the Mortgage Loan. The proceeds from the Mortgage Loan are being used
as follows: (a) to repay the $850 million bridge loan entered into in connection
with the Sprint transaction (which closed on May 26, 2005, and in which the
Company, Sprint Corporation, a predecessor of Sprint Nextel Corporation
("Sprint"), and certain Sprint subsidiaries consummated an agreement whereby the
Global Signal Acquisitions II LLC and one or more other subsidiaries of the
Company are leasing or otherwise operating approximately 6,600 communications
sites and the related towers and assets), (b) to repay $402.7 million under a
mortgage loan that the Company closed in February of 2004 (the "February 2004
Mortgage Loan"), (c) to repay $151.8 million of the then outstanding borrowings
under the Company's acquisition credit facility (entered into on April 25, 2005
by Global Signal Acquisitions LLC with Morgan Stanley Asset Funding Inc. and
Bank of America, N.A. to provide funding for the acquisition of additional
communications sites) (the "Acquisition Credit Facility"), and (d) to provide
$145.5 million (i) to pay expenses related to the Mortgage Loan, (ii) to fund
impositions and other reserves related to the Mortgage Loan ($23.6 million),
(iii) to pay prepayment penalties associated with the February 2004 Mortgage
Loan ($7.1 million) and (iv) to provide funds for working capital and general
corporate purposes, including potential future acquisitions. The Borrowers and
their direct parent, Global Signal Holdings V LLC, are seperate legal entities
from the Company, with their own assets, which are not available to satisfy the
debts and other obligations of the Company or any of its other affiliates.
The principal amount of the Mortgage Loan is divided into eight
tranches, each having a different level of seniority. Interest accrues on each
tranche at a fixed rate per annum. As of February 28, 2006, the weighted average
interest rate on the various tranches was approximately 5.7%. The Mortgage Loan
requires monthly payments of interest until its maturity date in February 2011.
The Mortgage Loan is secured by, among other things, (a) mortgage liens on the
Borrowers' interests (fee, leasehold or easement) in over 80% of their
communications sites, (b) a security interest in substantially all of the
Borrowers' personal property and fixtures and (c) a pledge of equity interests
in each of the Borrowers (including a pledge of the equity interests of Pinnacle
Towers LLC, Global Signal Acquisitions LLC and Global Signal Acquisitions II LLC
from their direct parent, Global Signal Holdings V LLC).
On a monthly basis, the excess cash flows from the Borrowers' assets,
after the payment of principal, interest, reserves and expenses, are distributed
to the Borrowers. If the debt service coverage ratio ("DSCR") (defined in the
Agreement as the net cash flow for the sites for the immediately preceding
twelve-calendar-month period divided by the amount of interest that the
Borrowers will be required to pay over the succeeding twelve months on the
Mortgage Loan) as of the end of any calendar quarter falls to 1.35 times or
lower, then all excess cash flow will be deposited into a reserve account
instead of being released to the Borrowers. The funds in the reserve account
will not be released to the Borrowers unless the DSCR exceeds 1.35 times for two
consecutive calendar quarters. If the DSCR falls below 1.20 times as of the end
of any calendar quarter, then all funds on deposit in the reserve account along
with future excess cash flows will be applied to prepay the Mortgage Loan with
applicable prepayment considertation.
The Borrowers may not prepay the Mortgage Loan in whole or in part at
any time prior to February 28, 2008, the second anniversary of the closing date,
except in limited circumstances (such as the occurrence of certain casualty and
condemnation events relating to the communications sites securing the Mortgage
Loan). Thereafter, prepayment is permitted provided it is accompanied by any
applicable prepayment consideration. If the prepayment occurs within three
months of the February 2011 monthly payment date, no prepayment consideration is
due.
The Mortgage Loan documents include covenants and events of default and
acceleration customary for mortgage loans subject to rated securitizations.
Among other things, the Borrowers are prohibited from incurring additional
indebtedness or further encumbering their assets. The effective interest rate on
the Mortgage Loan, including the benefit from terminating interest rate swaps
which qualify for hedge accounting and the amortization of deferred debt
issuance costs, is approximately 5.5%.
In connection with the Mortgage Loan, the Borrowers entered into a
management agreement, dated as of February 28, 2006 (the "Management
Agreement"), with Global Signal Services LLC ("GS Services") to manage all of
the Borrowers' wireless communications sites. GS Services is also a subsidiary
of the Company. This Management Agreement supersedes in their entirety the
existing management agreement between GS Services and Pinnacle Towers Inc. (now
Pinnacle Towers LLC) and the subsidiaries listed on the signature pages thereto,
dated as of February 5, 2004, the management agreement between GS Services and
Global Signal Acquisitions LLC, dated as of June 29, 2005, the management
agreement between GS Services and Global Signal Acquisitions II LLC, dated as of
April 25, 2005, and the Assignment and Assumption of Management Agreement
between Pinnacle Towers Inc. (now Pinnacle Towers LLC) and GS Services, dated
February 5, 2004.
Pursuant to the Management Agreement, GS Services performs, on the
Borrowers' behalf, those functions reasonably necessary to maintain, market,
operate, manage and administer the Borrowers' communications sites. GS Services
also performs administrative and support services for the Borrowers, including
services relating to accounting, litigation management, finance, the maintenance
of books and records and the preparation of all financial statements, reports,
notices and other documents required to be delivered by the Borrowers under the
terms of the Mortgage Loan. GS Services acts as the Borrowers' exclusive agent
with regard to the services described in the Management Agreement. In such
capacity, GS Services has the authority to negotiate, execute and implement, for
and on the Borrowers' behalf, all tenant leases, ground leases, easements,
contracts, permits, licenses, registrations, approvals, amendments and other
documents as GS Services deems necessary or advisable.
GS Services arranges for the payment of all operating expenses and the
funding of all capital expenditures out of amounts on deposit in one or more
operating accounts maintained on the Borrowers' behalf. For each calendar month,
GS Services is entitled to receive a management fee equal to 7.5% of the
Borrowers' operating revenues for the immediately preceding calendar month. The
Management Agreement may be terminated and GS Services replaced as manager upon
the occurrence of an event of default under the Mortgage Loan and upon the
occurrence of certain other events.
The preceding summaries of certain provisions of the Mortgage Loan and
the Management Agreement are qualified in their entirety by reference to the
complete Mortgage Loan and the Management Agreement filed as exhibits 10.1 and
10.2 hereto, respectively, and incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Amended and Restated Loan and Security Agreement, dated as of February
28, 2006, by and among the Borrowers (as defined therein) signatory
thereto and Towers Finco III LLC.
10.2 Management Agreement, dated as of February 28, 2006, by and among
Global Signal Acquisitions LLC, Global Signal Acquisitions II LLC,
Pinnacle Towers LLC and the other entities listed on the signature
pages thereto and Global Signal Services LLC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GLOBAL SIGNAL INC.
(Registrant)
/s/ Jeffrey A. Klopf
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Jeffrey A. Klopf
Executive Vice President, General Counsel and
Secretary
Date: March 1, 2006
EXHIBIT INDEX
Exhibit Number Exhibit
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10.1 Amended and Restated Loan and Security Agreement, dated
as of February 28, 2006, by and among the Borrowers (as
defined therein) signatory thereto and Towers Finco III
LLC.
10.2 Management Agreement, dated as of February 28, 2006, by
and among Global Signal Acquisitions LLC, Global Signal
Acquisitions II LLC, Pinnacle Towers LLC and the other
entities listed on the signature pages thereto and
Global Signal Services LLC.