A cool $1B will be coming to Univision, half from a secured loan and half from a secured note offering – and the bill for each half won’t come due until 2020 and 2023 respectively. A 2014 loan will be paid off under the plan.
The company also plans to pay off some of its obligations that come due in 2017, and will put some of the incoming funds into its investment in the El Rey Network.
Moody’s Investor Service gave the move a generally good rating, and said it did not affect the company’s B3 Corporate Family Rating.
Univision is extending its debt profile, and this part of the plan will come with a modest and manageable $10M in additional annual interest expense, said Moody’s. On top of that, the 2017 obligation may possibly be dealt with using free cash flow, helping to bring leverage down from its current high level.
Moody’s John E. Puchalla took a look at Moody’s immediate future. He said, “Moody’s expects revenue growth in a 6-7% range in 2013 assuming a continued moderate economic expansion. The absence of meaningfulpolitical advertising is a drag, although Moody’s projects continuedstrong distribution fee growth and a roughly 6% increase in television advertising (excluding non-cash revenue from Televisa, major soccer, and political). In 2014, Moody’s expects 11-13% revenue growth with a strong boost from the 2014 World Cup in Brazil. Debt-to-EBITDA should decline to approximately 11x in 2013 and 10x in 2014 based on Moody’s projections. Moody’s believes Univision has adequate cash, cash flow and revolver capacity to fund debt service through 2015. Moody’s anticipates Univision will continue to proactively refinance its approximately $1.04 billion 2016/2017 maturities, although there could be refinancing risk if credit market/economic conditions deteriorate given the company’s revenue sensitivity to cyclical advertising.”