By Paul Deckelman
New York, Oct. 31 – Media General, Inc. upsized its planned offering of eight-year senior notes (B3/B+/) to $400, pricing them at a discount to par to yield 5.954%, high-yield syndicate sources said Friday. The bonds priced at 99.5 with a coupon of 5 7/8% in order to reach that yield.
Price talk was for a yield in the region of 6% to 6¼%.
The size was originally expected to be $300 million.
The deal had been expected to price as a quick-to-market transaction on Thursday after it was pitched to potential investors via a mid-morning conference call; however, it was pushed off until Friday, and priced shortly after the order books had closed at mid-morning.
The Rule 144A and Regulation S offering, which is being sold with registration rights, was brought to market via left bookrunner RBC Capital Markets Corp., along with joint bookrunners Capital One Securities, Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc.
The notes will have three years of call protection, an equity clawback provision and a change-of-control put at 101%.
The bond deal will settle into escrow on Nov. 5.
Media General, a Richmond, Va.-based television broadcasting and digital media company, is selling the notes as part of the financing for its pending merger with sector peer LIN Media LLC, an Austin, Texas-based TV broadcasting and multimedia company.
The funding also will include a new credit facility that was launched last Friday via joint lead arrangers RBC, Deutsche Bank, SunTrust Robinson Humphrey Inc., U.S. Bank and Capital One.
Besides the upsizing of the bond deal, the syndicate sources said Friday that there would be changes made to the credit facility portion of the financing, which was originally planned to total $1,015,000,000.
A planned $600 million term loan-A tranche was dropped entirely, and a planned $325 million term loan B-2 tranche will now be upsized by $500 million, to $825 million from $325 million originally. That tranche will now be covenant-lite, while the existing term loan-B tranche will maintain its maximum total net leverage covenant.
The bank financing was also expected to include a $90 million incremental revolving credit line.
With the changes, the projected secured leverage ratio that the company will carry post-transaction, with debt expressed as a multiple of EBITDA, will be reduced to 3.6 times from the originally planned 3.8 times, although the total leverage ratio will remain the same, at 5.0 times.
The notes are being officially issued by Media General Financing Sub, Inc. Upon the closing of the merger, this unit will merge with and into LIN Media subsidiary LIN Television Corp., which will continue as the surviving corporation and assume all of the issuer’s obligations under the indenture governing the notes.
The proceeds from the note issue, together with cash on hand, proceeds from previously announced divestitures and bank borrowings through proposed amendments to its existing credit agreement, will be used to pay a portion of the merger consideration for the business combination with LIN, to repay certain existing debt of LIN and to pay related fees and expenses.
Under the merger agreement, LIN shareholders will receive $25.97 in cash or 1.4714 shares of the new holding company, subject to proration. The maximum cash amount that will be paid to the LIN Media shareholders is $763 million. Media General shareholders will receive one share of the new holding company for each share of Media General that they own upon closing.
| Issuer: | Media General Financing Sub, Inc. (subsidiary of Media General, Inc.; to be merged with and into LIN Television Corp. following the merger of Media General and LIN Media)
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| Amount: | $400 million, upsized from originally announced $300 million
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| Maturity: | Nov. 15, 2022
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| Securities: | Senior notes
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| Joint bookrunners: | RBC Capital Markets Corp (left). Capital One Securities, Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc., U.S. Bancorp Investments Inc.
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| Co-managers: | Barclays, BofA Merrill Lynch, MUFG, Mizuho Securities USA Inc.
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| Coupon: | 5 7/8%
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| Price: | 99.5
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| Yield: | 5.954%
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| Spread: | 381 bps over the 1.625% U.S. Treasury due Nov. 15, 2022
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| Call protection: | Beginning Nov. 15, 2017 at 104.406, then 102.938, 101.469 and par
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| Make-whole call: | Treasuries plus 50 bps
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| Equity clawback: | For up to 50% of issue (at least $200 million must remain outstanding) at 105.875 until Nov. 15, 2017
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| Change-of-control put: | 101%
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| Trade date: | Oct. 31
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| Settlement date: | Nov. 5 (T+3)
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| Ratings: | Moody's: B3
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| Standard & Poor's: B+
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| Distribution: | Rule 144A and Regulation S with registration rights
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| Price talk: | 6% to 6¼%
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| Marketing: | Short roadshow
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