Warner Music launches $820 million delayed-draw term loan to investors

By Sara Rosenberg

New York, April 25 - Warner Music Group Corp. scheduled a bank meeting for 3 p.m. ET on Thursday to launch an $820 million seven-year first-lien delayed-draw covenant-light term loan, according to market sources.

Credit Suisse Securities (USA) LLC, Barclays, UBS Investment Bank, Macquarie and Nomura are leading the financing.

Price talk on the loan is Libor plus 325 basis points with a 1% Libor floor and an original issue discount 991/2, sources said.

The debt has a ticking fee of a third of the spread from days 31 to 60, two thirds of the spread from days 61 to 90 and the full spread thereafter, sources continued. There is no ticking fee for the first 30 days.

The loan has a springing maturity at July 2018.

Also, the loan is split between a $710 million tranche and a $110 million tranche as they are expected to fund at different times due to timing of regulatory approvals, sources explained.

Commitments are due on Wednesday, sources added.

Proceeds will be used to fund the acquisition of Parlophone Label Group from Universal Music Group for £487 million (around $765 million) in an all-cash transaction and for general corporate purposes.

Included in the loan is 101 soft call protection for six months from closing of the acquisition.

Closing is expected to occur mid-year, subject to regulatory approvals and a consultation procedure with employee representatives.

In addition, the company said in an 8-K filed with the Securities and Exchange Commission that it amended its revolving credit facility to reduce pricing upon the closing of the delayed-draw loan and increase flexibility to make investments in non-guarantors.

The amendment was completed on April 23.

Credit Suisse is the administrative agent on the revolver.

Furthermore, prior to completion of the delayed-draw loan, the company expects to pay down $100 million of its existing senior secured term loan using cash on hand.

The company also intends to use cash on hand to redeem about $72 million of its 6% senior secured notes due 2021 and 6¼% senior secured notes due 2021.

Warner Music is a New York-based music content company. Parlophone includes a range of recordings and classic and contemporary artists spanning a wide array of musical genres.

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