Media General gets a break from its lenders


Media General executives told Wall Street analysts in their quarterly conference call last month that the company was in danger of a technical default on its loan covenants. However, the company had already been working for some time on a refinancing package. Now it’s gotten a waiver from the bankers as work continues on a complete refi package.

Media General is calling this the “first step in the refinancing process.” The company’s lender group has agreed to a short-term bridge amendment to Media General’s existing credit agreement. “The amendment provides Media General with near-term flexibility as it pursues discussions with the lender group concerning covenant amendments and an extension of the maturity of $363 million of bank debt due next year, March 29, 2013,” the company said. The bridge amendment resets the leverage ratio during the first quarter of 2012 and waives a February 9th, 2012, deadline to demonstrate covenant compliance on a prospective basis.

“We’re pleased that our lender group waived the technical issues under our existing credit agreement. Their doing so provides the time and flexibility needed to continue our constructive dialogue on an amend-and-extend proposal,” said Media General CFO James Woodward. “We are seeking covenant amendments that would provide more flexibility to operate in a continued uncertain advertising environment, particularly in our print business, and an extension that would provide Media General with time and flexibility to reduce total debt and to refinance.”

Media General’s lender group is led by Bank of America, with participation by Advanced Series Trust – AST High Yield Portfolio, Berrysburg Inc., CFIM Hybrid Tri-Asset Fund, Commingled Pension Trust Fund (Distresses Debt Opportunities) of JPMorgan Chase Bank NA, Consumer Program Administrators Inc Distressed, Harbour View CLO 2006-1, Hewitt Ennisknupp Inc., JPMorgan Core Plus Bond Fund – Distressed, JPMorgan Distressed Debt Opportunities Master Fund Ltd., JPMorgan Leveraged Loans Master Fund LP, JPMorgan Tax Aware High Income Fund, JPMorgan Chase Bank NA as Trustee of the JPMorgan Chase Retirement Plan, JPMorgan Floating Rate Income Fund, JPMorgan High Yield Fund, JPMorgan Income Builder Fund, JPMorgan Strategic Income Opportunities Fund –Distressed, Merrill Lynch Credit Products, LLC, National Railroad Retirement Investment Trust, Oppenheimer Master Loan Fund, LLC, Oppenheimer Senior Floating Rate Fund, Pacholder High Yield Fund Inc., Presidential Life Insurance Company, Prospect Harbor Credit Partners, LP, Regions Bank, Ridgeworth Funds – Seix Floating Rate High Income Fund, Rochdale Fixed Income Opportunities Portfolio. The Royal Bank of Scotland plc, Sankaty Credit Opportunities III LP, Sankaty Credit Opportunities IV LP, Sankaty Credit Opportunities (Offshore Master) IV LP, Scotiabanc Inc., Sumitomo Mitsui Banking Corporation, SunTrust Bank and Unipension Invest F.M.B.A. High Yield Obligationer II. 

If a lot of those names don’t sound like banks it’s because they’re not. Rather, they are funds which invest in distressed corporate debt.

RBR-TVBR observation: As noted in the last couple of quarterly conference calls, the easiest way to improve Media General’s balance sheet for a refi would be to sell some assets. With the transaction marketplace improving, we wait to see if the company is going to part with any of its 18 TV stations and 23 newspapers.