Barrington Broadcasting Group announced a cash tender for all $55 million of its outstanding 10.5% Senior Subordinated Notes due 2014. It’s part of a refinancing totaling $195 million, which has gotten decent ratings from Moody’s Investors Service.
Moody’s assigned B2 ratings and LGD3 – 34% assessments to Barrington Broadcasting Group
LLC’s proposed $10 Million Senior Secured 1st Lien Revolver and $185 Million Senior Secured 1st Lien Term Loan B. The new credit facilities will be used to refinance the existing senior secured revolver due August 2012, senior secured term loan B due August 2013 and senior subordinated notes due August 2014. In addition, Moody’s revised the Probability of Default Rating (PDR) to B3 from B2, with the downgrade reflecting the all bank debt structure and the ratings agency’s expectations for a 65% recovery in a distress scenario. Moody’s also affirmed the B2 CFR and Speculative Grade Liquidity (SGL) Rating at SGL – 3 and said the rating outlook is “stable.”
“Barrington’s B2 corporate family rating incorporates its moderately high, trailing 8 quarter pro forma debt-to-EBITDA ratio of just under 5.0x at year end 2011 (including Moody’s standard adjustments, or approximately 5.4x based on trailing 4 quarters) which we expect to reduce to approximately 4.3x (on a trailing 8 quarter basis) by year end 2012. Moderately high leverage poses challenges for managing a business vulnerable to advertising spending cycles,” Moody’s said in its analysis. “Lack of scale also constrains the rating, although the company benefits from a diverse station portfolio in terms of both geography and network affiliations. These broadcast properties combined with Barrington’s continued local market focus and attractive margins create the capacity to generate good unlevered cash flow; however, the company faces heightened competition for advertising dollars due to media fragmentation. Ratings also reflect our expectations for the company to continue the recent trend of paying down debt using unlevered free cash flow and maintain modest liquidity over the rating horizon.”
As for the bond tender, Barrington will pay an early tender premium/consent payment of $30 per $1,000 of face value for bonds tendered by December 13. Otherwise, the tender at the $1,000 face value (plus accrued interest) is set to expire December 29th.
Here are the ratings actions by Moody’s:
Assignments:
..Issuer: Barrington Broadcasting Group LLC
.New $10 Million Senior Secured 1st Lien Revolver: Assigned B2, LGD3 — 34%
.New $185 Million Senior Secured 1st Lien Term Loan B: Assigned B2, LGD3 — 34%
Downgrades:
..Issuer: Barrington Broadcasting Group LLC
.Probability of Default Rating: Downgraded to B3 from B2
Unchanged:
..Issuer: Barrington Broadcasting Group LLC
.Corporate Family Rating: Affirmed B2
Outlook Actions:
..Issuer: Barrington Broadcasting Group LLC
….Outlook is Stable
To be withdrawn upon repayment at the close of the transaction:
..Issuer: Barrington Broadcasting Group LLC
.$17.5 Million Senior Secured Revolver due August 2012: B1, LGD3 — 34%
.$147.5 Million Senior Secured First Lien Term Loan B due August 2013 ($115.6 Million outstanding): B1, LGD3 — 34%
.$125 Million 10.25% Senior Subordinated Notes due August 2014 ($54.94 Million outstanding): Caa1, LGD5 — 88%
