A Beasley Broadcasting Group subsidiary has amended an agreement with its lenders to increase the total debt ratio allowed, but reduce the revolving loan facility by $37.1 million to $65 million. The interest rate is also increased.
The interest rates on the company’s term loans and revolving loans are adjusted based on the total debt to operating cash flow ratio. Importantly, the bank group, led by Bank of Montreal, Chicago Branch, has agreed to increase the Maximum Consolidated Total Debt Ratio to 7.50:1.00 until June 30, 2010. It then drops to 5.25:1.00 until December 31, 2010 and to 4.75:1.00 for the duration of the loan, running to June 30, 2015.
Under the amended terms, Beasley is barred from buying back more of its common stock until its consolidated total debt is less than five time consolidated operating cash flow. However, the company is permitted to buy back up to $500,000 of its common stock per year in connection with vesting of restricted stock. Beasley is also barred from paying cash dividends on its common stock until its consolidate total debt is less than five times its consolidated operating cash flow.
RBR/TVBR observation: This is what you can expect to see a lot of this year. Bankers really don’t want borrowers to go into default, so it’s a matter of negotiating terms that will work for both sides to keep operating through these turbulent financial seas. Reworking covenants was a major topic in the recently published RBR/TVBR 4th Annual Financial Roundtable.