OKLAHOMA CITY-Noting it was in the best interests of the company, Dobson Communications Corp. reported late yesterday that it will not declare or pay the cash dividend due Oct. 15 on its outstanding 12.25-percent senior exchangeable preferred stock or the Nov. 1 cash dividend on its outstanding 13-percent senior exchangeable preferred stock. Dobson added that according to its certificates of designation, so long as the company defers dividends on the stock in question, it may not pay dividends on its Series F convertible preferred stock that is due Oct. 15.
The rural carrier explained that its board of directors decided to defer the payments and instead use its cash to reduce its outstanding debt, increase liquidity and for general corporate purposes. All unpaid dividends will accrue interest at the stated dividend rates, compounded quarterly.
Dobson noted that if it fails to pay two semi-annual dividends on its senior exchangeable or Series F preferred stock, a majority of the stockholders would each have the right to elect two new directors to Dobson’s board. Dobson added that if its board is expanded by six new members it would not constitute a change of control under Dobson’s outstanding indentures or its subsidiary’s credit facility, unless a majority of the carrier’s existing board members fail to approve at least one of the new directors.
In early August Dobson slashed its full-year guidance for customer growth, average revenue per user and earnings before interest, taxes, depreciation and amortization in its second-quarter financial results, which sent the carrier’s stock down more than 50 percent to a 52-week low of $1.02 per share. Dobson’s stock was trading unchanged early Thursday at $1.29 per share.
