Univision volatile on drawdown news; Macrovision floats guidance; Newport Television firms timing

By Sara Rosenberg

New York, April 8 - Univision Communications Inc.'s strip of institutional bank debt came under quite a bit of pressure early on in the session and then partially rebounded as investors were jumpy over the news that the company drew most of its revolving credit facility and initiated a delayed-draw term loan borrowing.

In other news, guidance on Macrovision Corp.'s term loan B emerged ahead of its Wednesday bank meeting and Newport Television LLC firmed up timing on the launch of its already funded credit facility as a conference call has been scheduled for later this week.

Univision's strip of institutional bank debt was a big focus in trading on Tuesday as news of bank debt drawdowns caused some panic, bringing the paper lower, according to traders.

The institutional debt ended the day at 76 bid, 77 offered, down from 78 bid, 79 offered on Monday, and it traded as low as 74, traders said.

Pressuring the institutional bank debt was the discovery that the company drew down $700 million under its $750 million revolver and has started the process to draw $250 million under its $450 million delayed-draw term loan.

"Very ominous sign for the company to draw all of its revolver without any covenant breach or liquidity problems that people know about," one trader remarked. "It's covenant light, so it's not like they have to worry about a covenant breach."

The trader went on to say that the draw created "concern over the credit in general. Why do they need to draw all the money now? It's media; it's extremely levered. People worry about slight bumps. Difficult outlook."

According to the company, the draw was made now because of current financial market conditions so as to get greater financial flexibility, even though there's no immediate need for the additional liquidity.

"Univision's business is performing well in the current environment, but with lenders under pressure in today's unsettled financial markets, the company believes it is prudent to access its committed bank financing for general corporate purposes. Univision's revenues for the 2008 first quarter were up year over year and the company is expecting a strong 2008-2009 upfront," a company spokesperson told Prospect News.

Univision made the revolver draw on Monday and proceeds from the delayed-draw term loan borrowing are expected to be received on April 9.

The company may use up to $250 million of the revolver borrowings to pay down its $500 million second-lien asset sale bridge loan that is due on March 29, 2009. After giving effect to outstanding letters-of-credit, the company has about $18 million remaining available under the revolver.

The delayed-draw term loan funds are expected to be used to prepay, prior to maturity, senior notes that are due in October. Following this drawdown, there is no remaining credit available under the delayed-draw term loan being that the company previously borrowed $200 million to redeem its senior notes that matured in 2007.

Another underlying issue that may have caused the bank debt to fall in trading on Tuesday is that, if the company repays the bridge loan and the bonds, it would be clear from maturities into 2009 - which may sound like a good thing, but for those investors or were hoping for some way to get better terms on the bank debt, it's not, a trader explained.

The trader said that some people are hoping that the company will need an amendment at some point so that the lenders could get better pricing and covenants on the debt. Looming maturities was one issue that lenders hoped could create a favorable situation for them, the trader added.

Univision is a Los Angeles-based Spanish-language media company.

LCDX softens

Also in trading, LCDX 10 started trading on Tuesday, with levels moving slightly lower from the open, and LCDX 9 was weaker as well, according to traders.

LCDX 10 was quoted at the end of the day at 97 bid, 97.10 offered by one trader and at 96.95 bid, 97.05 by a second trader. At the open, the index was quoted at 97.05 bid, 97.20 offered.

"Trading has been in the 97 to 97.15 context," the first trader added.

Meanwhile, LCDX 9 was quoted at the end of the day at 94.75 bid, 95 offered by the first trader and at 94.95 bid, 95.05 offered by the second trader. On Monday, the index went out at 95.25 bid, 95.35 offered.

The cash market in general also felt softer on Tuesday, with levels down by about a quarter of a point, traders said.

"I don't really know what was driving it," one trader remarked.

Really no big headlines that drove stuff down today," a second trader added.

Macrovision guidance surfaces

Moving to the primary, pricing guidance on Macrovision's proposed $500 million five-year term loan B (Ba1/BB-) hit the market as the deal is gearing up for its official launch into syndication with a bank meeting on Wednesday morning, according to a market source.

The term loan B is being talked in the Libor plus the mid-to-high 300 basis points area, with an original issue discount in the 97 context, the source said.

More specific price talk is expected to emerge at the actual launch, the source added.

The term loan B has 101 call protection for one year against voluntary prepayments and a $75 million accordion feature.

Covenants include a maximum leverage ratio that opens at 4.5 times and gradually moves to 2.25 times at July 1, 2010, and a fixed charge coverage ratio that opens at 1.3 times, moves to 1.4 times at April 1, 2010 and then to 1.5 times at Oct. 1, 2010.

JPMorgan and Merrill Lynch are the joint lead arrangers and joint bookrunners on the deal, with JPMorgan the administrative agent.

In the event the company's leverage ratio is greater than 2.5 to 1.0 and more than $50 million in aggregate principal amount of its 2.625% convertible senior notes due 2011 remain outstanding 180 days prior to their scheduled maturity, the term loan B will become due on that 180th day.

Proceeds will be used to help fund the acquisition of Gemstar-TV Guide International, Inc. in a cash and stock transaction valued at $2.8 billion.

Other financing for the acquisition will come from $150 million in senior unsecured notes, which are backed by a bridge loan commitment, and by about $965 million in cash and cash equivalents.

The roadshow for the high-yield bonds is probably going to kick off around April 21.

Senior secured leverage is 2.5 times and total leverage is 4.3 times.

Commitments towards the credit facility are due on April 23 and closing is targeted for May 2.

Under the acquisition agreement, each share of Gemstar-TV Guide will be converted into the right to receive, at the election of each individual stockholder and subject to proration, $6.35 in cash or 0.2548 of a share of common stock in a new holding company that will own both Gemstar-TV Guide and Macrovision.

Upon completion of the transaction, Macrovision stockholders will own about 53% of the combined company, and Gemstar-TV Guide stockholders will own about 47%.

A special meeting of Macrovision stockholders will be on April 29 regarding the acquisition.

At first, Macrovision planned on getting $800 million of debt for the Gemstar-TV Guide purchase, comprised of a $650 million term loan B and a $150 million bridge loan, but the amount of funds needed was reduced using proceeds from the recently completed roughly $200 million sale of its software business unit to Thoma Cressey Bravo.

Macrovision is a Santa Clara, Calif.-based provider of services that enable businesses to protect, enhance and distribute their digital goods to consumers across multiple channels. Gemstar-TV Guide is a Los Angeles-based media, entertainment and technology company.

Newport Television sets launch

Newport Television came out with timing on the official launch of its $590 million senior secured credit facility as a conference call has been set for Friday at 10:30 a.m. ET, according to a market source.

Market buzz since late March has been that some investors have already been given an early look at the deal.

The facility consists of a $75 million revolver and a $515 million term loan.

As was previously reported, pricing guidance on the term loan is Libor plus 500 bps, with a 3% Libor floor and an original issue discount in the 95 area.

Wachovia, Goldman Sachs and UBS are the lead banks on the deal.

Proceeds were used to help finance Providence Equity Partners Inc.'s recently completed acquisition of Clear Channel Communications Inc.'s television group for $1.012 billion. Providence's total equity commitment was about $260 million.

The sale included 56 television stations, including 18 digital multicast stations, located in 24 markets across the United States. Also included in the sale were the stations' associated web sites, the Television Operations Center and Inergize Digital Media, which manages the television group's online and wireless initiatives.

The acquisition was first announced in 2007 and before finally closing in mid-March, Providence tried to get out of the deal but Clear Channel took the equity firm to court, and then Wachovia tried to back out of the debt commitment.

However, over the course of the negotiations, the purchase price for Newport Television was lowered from the originally agreed upon price of $1.2 billion.

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