NEW YORK — Sinclair Broadcast Group shares dipped below $37 a share in Tuesday’s trading after investment house Stephens slashed its price target on the media company’s stock.
Why? It is concerned about Sinclair’s acquisition of regional sports networks (RSNs) from Fox.
In an investor note distributed Tuesday morning (11/19), Stephens Managing Director Kyle Evans confirmed that the Little Rock-based firm cut its implied upside to 46% by trimming its target estimate to $55.
It had been at $80.
Evans says that Sinclair is getting little recognition for the RSN acquisition. At the same time, a new RSN carriage agreement with Dish for its DBS service and its Sling “skinny bundle” remains un-signed, with an impasse resulting in a “blackout” of the sports networks that has stretched since July.
On a positive note, Evans remains rather bullish, with an “Overweight” rating in place.
While Evans’ report put a damper on SBGI pre-noon, a recovery was seen across the afternoon hours. At the Closing Bell, shares were down 1.7% to $37.68.
A PRIVATE OFFERING OF SENIOR NOTES
The Stephens assessment of SBGI comes after Sinclair Television Group early Tuesday announced that it intends to offer in a private placement, subject to market conditions and other factors, $500 million aggregate principal amount of Senior Notes due 2030.
The net proceeds from the private placement of the 2030 Notes are intended to be used to fund the Issuer’s redemption of its 6.125% Senior Notes due 2022.
On November 12, Sinclair notified the trustee of the 2022 Notes that it intends to redeem, in full, its outstanding $500 million aggregate principal amount of the 2022 Notes on November 27.
The redemption of the 2022 Notes is contingent upon Sinclair’s successful incurrence of new debt financing in the amount of at least $500 million, which is expected to be satisfied upon closing of the offering of the 2030 Notes.
Sinclair says the redemption will be effected in accordance with the terms of the indenture governing the 2022 Notes.
The redemption price will be equal to the sum of 101.021% of the principal amount of the 2022 Notes outstanding together with accrued and unpaid interest on the principal amount being redeemed up to, but not including, the Redemption Date.
The redemption of the 2022 Notes, including the payment of accrued and unpaid interest and related fees and expenses, is expected to be funded from the net proceeds of the 2030 Notes and cash on hand.