LIN Media is in the midst of a major refi, borrowing more from its bankers and paying off a big chunk of its public bonds. Moody’s Investors Service has done its analysis and delivered its ratings for $460 million of debt.
Moody’s Investor Services assigned Ba3, LGD3 – 31% ratings to LIN Television Corporation’s (“LIN”) proposed incremental $260 million 1st Lien Senior Secured Term Loan B and existing $75 Million 1st Lien Senior Secured Revolver and $125 Million 1st Lien Senior Secured Term Loan A. In addition, Moody’s downgraded the $200 million 8.375% Senior Unsecured Notes to Caa1, LGD5 – 85% from B3, LGD4 – 58%. The incremental $260 million 1st Lien Term Loan B will be used to redeem the remaining 6.5% senior subordinated notes ($252 million outstanding). Moody’s affirmed LIN’s B2 Corporate Family Rating (CFR) and Probability of Default Rating (PDR). The Speculative Grade Liquidity (SGL) Rating was also affirmed at SGL – 2 and the rating outlook is stable.
“LIN’s B2 Corporate Family Rating (CFR) reflects the company’s leading market positions and good free cash flow generated by its geographically diversified portfolio of middle market broadcast television stations, moderately high leverage, and overhang from LIN TV Corp.’s guarantee of the NBC JV debt,” Moody’s said. The joint venture with NBCUniversal owns stations in Dallas and San Diego and Moody’s has indicated that it is unlikely to upgrade LIN’s debt until the overhang of the JV is resolved.
“The company’s strategic focus on duopoly operations in a majority of its markets leads to high in-market revenue share and good margins. Ratings incorporate expectations for higher retransmission revenues in 2012 followed by increased expenses related to reverse compensation paid to the networks. Exposure to cyclical advertising revenue and the ongoing risk of audience diffusion resulting from media fragmentation weigh on the ratings. As of September 30, 2011, LIN’s two-year average debt-to-EBITDA ratio was 5.5x (including Moody’s standard adjustments, 5.3x for the trailing 12 months) and we expect LIN will utilize the vast majority of its free cash flow to further reduce debt balances, leading to improved capacity to fund an acquisition or dissolution of the NBC JV within leverage parameters consistent with its B2 CFR. Liquidity is good with minimum two-year average free cash flow of approximately $60 million (or 9% of debt balances) over the rating horizon and extended maturities,” Moody’s said in its analysis.
Ratings actions:
Assigned:
…Issuer: LIN Television Corporation
.Incremental $260 Million 1st Lien Senior Secured Term Loan B (matures in 7 years): Assigned Ba3, LGD3 — 31%
.Existing $75 Million 1st Lien Senior Secured Revolver due 2016: Assigned Ba3, LGD3 — 31%
.Existing $125 Million 1st Lien Senior Secured Term Loan A due 2017: Assigned Ba3, LGD3 — 31%
Downgraded:
Issuer: LIN Television Corporation
. ..8.375% Sr Unsecured Notes due 2018: Downgraded to Caa1, LGD5 — 85% from B3, LGD4 — 58%
Affirmed:
…Issuer: LIN Television Corporation
..Corporate Family Rating: Affirmed B2
..Probability of Default Rating: Affirmed B2
..Speculative Grade Liquidity Rating: Affirmed SGL — 2
Outlook Actions:
…Issuer: LIN Television Corporation
..Outlook is Stable
To be withdrawn upon close of the transaction
…Issuer: LIN Television Corporation
..6.5% Million Sr Subordinated Notes due 2013: Caa1, LGD5 — 83%
..6.5% Class B Sr Subordinated Notes due 2013: Caa1, LGD5 — 83%
