Mexican billionaire Carlos Slim Helú is the white knight who’s come riding to the rescue of the Gray Lady. Two banks that his family owns have agreed to buy $250 million in new bonds issued by the New York Times Company. The cash will give the company some financial breathing room, but at a hefty price. The interest rate is over 14% — with warrants besides.
“This agreement provides us with increased financial flexibility to continue to execute on our long-term strategy,” said NY Times Co. CEO Janet Robinson. “The proceeds from this transaction will be used to refinance existing debt, including amounts currently borrowed under a revolving credit facility that matures in May 2009. We continue to explore other financing initiatives and are focused on reducing our total debt through the cash we generate from our businesses and the decisive steps we have taken to reduce costs, lower capital spending, decrease our dividend and rebalance our portfolio of assets,” she said.
The senior unsecured notes due 2015 have a coupon of 14.053 percent, of which the NY Times Co. may elect to pay 3% in kind (more of the notes). The notes are callable beginning three years from the issue date at 105% of par, with subsequent call prices declining ratably to par.
Slim’s Banco Inbursa and Inmobiliaria Carso also received detachable warrants for an aggregate amount of 15.9 million Class A shares at a strike price of $6.3572. The NY Times Co. stock had closed at $6.41 the previous day, but fell nearly 8% after the financing deal was announced. The warrants expire in January 2015.