TV station, cable system and newspaper owner Block Communications announced a tender offer for all of its $150 million of 8.25% senior notes due 2015. The bond buyback is part of a $250 million refinancing effort by the company.
Block is offering total consideration of $1,030 per $1,000 face value, including a $10 premium for bonds tendered along with consents for amendments to the terms of the issue by an early tender deadline of January 26th. For anyone who misses the early deadline and bonus payment, the regular tender is set to expire February 9th.
To pay for the redemption and refinance its existing $115 million of senior term loan, Block is preparing to sell $250 million of new senior notes due 2020.
According to a recent report by Wells Fargo Securities high-yield bond analysts Bishop Cheen and Davis Hebert, Block had Q3 2011 revenues of $108.5 million, down 0.8% from a year earlier. Revenues from its cable systems rose 1.8% to $54.6 million, while TV revenues declined 2.8% to $10.7 million and newspaper revenues fell 5.8% to $36 million. Cable cash flow gained 1.15 to $22.7 million, broadcast cash flow rose 12.4% to $2.1 million and publishing cash flow improved to a negative $5.3 million from a negative $8.1 million.
“Block successfully renegotiated union contracts in August — the second major restructuring at its publishing division in three years — that management says will help publishing to generate black ink next year and will lower legacy costs,” the Wells Fargo analysts noted. That’s supposed to cut costs at the newspapers by $7 million per year.
Block owns TV stations in Louisville, KY; Boise, ID; Lima, OH; and Decatur, IL. It has cable systems in Ohio and Michigan and daily newspapers in Pittsburgh, PA and Toledo, OH.