Moody’s Investors Service has assigned a “Ba2” rating to The E.W. Scripps Company‘s newly launched offering of $400 million of Senior Unsecured Notes due 2025.
The rating comes after the broadcast media company on Monday (4/17) commenced the private placement offer, which is subject to market conditions and other factors.
In conjunction with the notes issuance, Scripps is seeking to amend and restate its existing $100 million senior secured revolving credit facility to increase the borrowing capacity to $125 million and extend the maturity to 2022.
The notes offering is not conditioned on executing the amended revolving credit facility.
Proceeds from the offering will be used to repay the existing $391 million term loan B due in 2020, to pay related fees and expenses and for general corporate purposes.
Moody’s chimed in by assigning a “Baa2” rating to the new amended and extended $125 million Senior Secured Revolver due 2022.
“The Baa2 rating on the revolver is the result of a change in capital structure from predominantly secured to unsecured with the revolver having a priority claim and benefiting from significant lift provided by the loss absorption assumed by the subordinate note holders in an event of default,” Moody’s said.
Concurrent with this rating action, Moody’s affirmed Scripps’ Ba2 Corporate Family Rating (CFR) and SGL-1 Speculative Grade Liquidity Rating.
The rating outlook is stable.
“We are taking advantage of historically low long-term interest rates to extend the maturity of our debt to 2025,” said Scripps Chairman and President/CEO Rich Boehne. “Since this is a refinancing, we are not significantly increasing the total amount of our debt. We would have pro-forma net leverage of 1.4x based on 2016 results, and that level of leverage allows us the financial flexibility we are accustomed to putting to work as we look for opportunities to grow the company.”
The notes and related guarantees have not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption.
The notes will be offered only to qualified institutional buyers.
A Q1 PREVIEW AFFIRMS SCRIPPS GUIDANCE
Although Scripps has not yet finalized its financial results, the company expects its Q1 2017 operating results, set for release May 5, to be consistent with its prior expectations.
Accordingly, Q1 television revenue is expected to be flat, compared to the same period in 2016.
Radio revenue is expected to decrease in the mid-single-digit range.
Digital revenue is expected to increase in the mid-20 percent range.
It is also expected that for the first quarter of 2017, television expenses will increase by mid-single digits, radio expense will decrease by low-single digits, and digital expense will increase in the mid-40% range compared to Q1 ’16.
Based upon these results, segment profit less corporate expenses for Q1 2017 will decrease about 40% compared to Q1 2016, largely due to the lack of political advertising in this non-political year.