With its successful sale of a new bond issue last week, Media General has completed efforts to put in place a new financing structure which the company says will provide it with enhanced financial flexibility for years to come.
Along with the sale of new senior notes, Media General simultaneously amended its existing credit facilities.
Following the transactions, the company said it has in place with its syndicate of banks a $400 million term loan that is fully drawn and a $70 million revolving credit line with approximately $6 million drawn. Also outstanding are 11.75% Senior Notes with a par value of $300 million issued at a discount, which mature in 2017. The amended credit facility matures in March 2013 and bears an interest rate of LIBOR plus a margin based on the company’s leverage ratio, as defined in the agreement. The covenants have been amended to reflect the current operating environment and position the company to emerge from the economic downturn. Total debt outstanding is approximately $700 million.
“We are pleased with the overall parameters of our new financing structure as well as the strong response we received from our lenders and new fixed income investors. Our amended and extended credit facility and Senior Notes placement provide Media General with greater financial flexibility as we execute our business strategy while continuing to navigate soft economic conditions,” said CEO Marshall Morton.
“We are committed to further strengthening our financial position and building shareholder value over the long term. In combination with our significantly reduced cost structure, Media General is well-positioned to capitalize on an improved economy. Our focus will continue to be on the development of our fast-growing digital media businesses and building on the strong content-generating strengths of our local broadcast television and newspaper platforms,” Morton added.
Media General provided some updated guidance to Wall Street: “The company expects interest expense in 2010 to approximate $72 million, which includes approximately $6 million of new and existing debt issuance costs to be expensed immediately. Excluding this $6 million, the all-in interest rate in 2010 approximates 8.5%. Media General expects free cash flow in 2010 will be approximately $58-60 million, an increase from the previous estimate of $48-$50 million, which mostly reflects the timing of the second interest payment on the bonds moving into early 2011. Capital expenditures are expected to be approximately $26 million, down from the previous forecast of $28-29 million.”