Noting recent reports that Newport Television has been put up for sale, Moody’s Investors Service has advised the company’s debt holders that a sale would likely trigger change of control provisions and make $750 million of rated debt come due.
“Moody’s believes that, depending on the deal structure, change of control protection under the indentures (requiring repayment of these notes at 101%) and under the credit agreement is likely to mitigate the potential negative impact of a sale of the company under a typical, highly-leveraged LBO capital structure. Absent change of control protection under each of its debt agreements, Newport Television’s debt would likely face downward rating pressure if the company were to be sold and potential increases in debt used to finance the transaction were to meaningfully increase leverage ratios and reduce free cash flow,” said a statement from Carl Salas, Moody’s Vice President and Senior Analyst.
Moody’s currently rates approximately $750 million of debt of Newport Television including the senior secured revolver and term loans due 2016, as well as the senior PIK toggle notes due 2017.
Privately held Newport Television Holdings LLC is a portfolio company of Providence Equity Partners. According to Moody’s, revenues for the trailing 12 months ended December 31, 2011 totaled $292 million.
RBR-TVBR observation: Now that the station trading market has come back from the dead it is hardly surprising that the private equity firms who placed their bets at the wrong time – just before the “great recession” – are looking to get out. Four Points and Freedom have already been sold, both to Sinclair as it happens. McGraw-Hill’s TV group as not a PE play, but it has been sold as well (to Scripps). Nexstar remains for sale (although that investment by ABRY goes back many more years) and Newport is being shopped. So no one can complain about a lack of inventory.