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RBC Capital Markets Agents Media General’s $945MM Facility

August 06, 2013, 07:48 AM
Filed Under: Media

Media General entered into a new credit agreement with a syndicate of lenders in connection with its pending merger with Young Broadcasting. The new credit facilities, which are contingent upon the closing, consist of a $60 million, five-year revolving credit facility and a $885 million, seven-year term loan. The revolving credit facility interest rate is LIBOR plus 2.75%.  The term loan interest rate is LIBOR plus 3.25%, with a 1.00% LIBOR floor. RBC Capital Markets acted as Lead Left Arranger and will serve as the Administrative Agent on the new Media General credit facility.

As Media General announced on June 6, 2013, the company has entered into a merger agreement with Young Broadcasting, which is expected to be completed in the late third quarter or early fourth quarter of this year.

"The merger of Media General and Young Broadcasting is a transformational event for both companies," said George L. Mahoney, Media General's president and chief executive officer.  "Among its many benefits, the combination offered an opportunity to refinance our total debt at a significantly lower cost.  This became a priority for us."

"Today's announcement puts the new Media General on an even stronger footing than planned.  We had anticipated approximately $15 million of financing synergies as a result of the transaction.  In fact, these synergies are nearly doubling, to $29 million.  Our pro forma cash interest will be approximately $39 million annually, based on current LIBOR levels, compared with the two companies' current standalone annual interest expense of approximately $75 million.  This is a significant free cash flow pick-up for our company," said Mahoney.

Proceeds from the new credit facilities will be used to repay all of the outstanding debt of Media General and Young Broadcasting, including associated call premiums.  As of March 1, 2013, Media General's outstanding debt was $601 million, and Young's was $132 million.  Proceeds also will fund a $50 million contribution to Media General's qualified pension plan and pay transaction fees and expenses.

Shield Media LLC and Shield Media Lansing LLC (Shield Media), companies with which Young Broadcasting has shared services arrangements for two stations, entered into a new $32 million term loan facility with a syndicate of lenders, dated as of July 31, 2103, the availability of which is contingent on certain conditions, primarily the successful completion of the merger of Media General and Young Broadcasting. The new term loan facility will refinance Shield Media companies' existing $32 million term loans under one new credit agreement.  The existing Shield Media term loans are guaranteed on a secured basis by Young Broadcasting, which will continue under the new agreement.  The new loan will have a term of five years and an interest rate of LIBOR plus 3.25%.  It will also be guaranteed by Media General.

RBC Capital Markets acted as Lead Left Arranger and will serve as the Administrative Agent on the Shield Media credit facilities as well.

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