New York, Dec. 3 - Emmis Communications Corp. said it amended the $1.29 billion senior secured credit facility of its Emmis Operating Co. unit and added that it is working on alternatives to reduce its leverage.
The amendments relax financial covenants through Dec. 1., 2002, with extensions to some possible into 2003 if the company sells $300 million of subordinated debt by Feb. 28, 2002, according to a filing with the Securities and Exchange Commission.
"Emmis is committed to reducing its leverage and is working on a number of alternatives," said Walter Berger, executive vice president and chief financial officer of the Indianapolis, Ind. media company, in a news release. "Today's announcement is another step toward addressing this issue while we work through this process to arrive at an appropriate capital structure."
In return for the amendments, Emmis paid a fee of 25 basis points of the total commitment and the interest rate grid was revised, according to the SEC filing. The revolving commitment is also reduced by $100 million.
The company now pays a margin over either Libor or the base rate as follows (the leverage ratio is the total leverage ratio defined in the agreement):
Revolver and term A loans Term B loans
| Leverage Ratio | Base rate | Libor | Base rate | Libor
|
| 8.25:1.00 or higher | 225 bps | 325 bps | 250 bps | 350 bps
|
| 7:00:1.00 or higher | 200 bps | 300 bps | 250 bps | 350 bps
|
| 6.50:1.00 or higher | 175 bps | 275 bps | 250 bps | 350 bps
|
| 6.00:1.00 or higher | 150 bps | 250 bps | 250 bps | 350 bps
|
| 5.50:1.00 or higher | 125 bps | 225 bps | 250 bps | 350 bps
|
| 5.00:1.00 or higher | 100 bps | 200 bps | 250 bps | 350 bps
|
| 4.50:1.00 or higher | 75 bps | 175 bps | 225 bps | 325 bps
|
| Below 4.50:1.00 | 50 bps | 150 bps | 225 bps | 325 bps
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| However, after the amendment, the loan will be at the 6.50:1.00 or higher rate, stepping up 25 basis points on June 1, 2002, Sept. 1, 2002 and Dec. 1, 2002. The rate reverts to the pricing grid once the senior leverage ratio is below 5.00:1.00 for two consecutive quarters.
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| The changes to the covenants permit total leverage of up to 8.5 times for the next four quarters and up to 6.5 times for the senior leverage ratio. The interest coverage ratio required is reduced to 1.4 times and the pro forma debt service coverage ratio is reduced to 1.05 times.
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| Emmis' credit facility is with Toronto Dominion (Texas), Inc. as administrative agent, Fleet National Bank as documentation agent, First Union National Bank as syndication agent and Credit Suisse First Boston as co-documentation agent.
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