MSG Holdings enters $1.8 billion credit facility linked to spinoff

By Wendy Van Sickle

Columbus, Ohio, Sept. 28 – MSG Holdings, LP, a subsidiary of Madison Square Garden Co., entered into a five-year $1.55 billion term loan facility and a five-year a $250 million revolving credit facility on Monday relating to the upcoming spinoff of the company’s sports and entertainment businesses from its media businesses, according to an 8-K filed with the Securities and Exchange Commission.

Borrowings bear interest at Libor plus 150 basis points to 225 bps, depending on leverage ratio. The revolver has a commitment fee of 30 bps.

J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc., MUFG Union Bank, NA, the Bank of Nova Scotia, U.S. Bank NA, Fifth Third Bank, TD Bank, NA, Wells Fargo Bank, NA, Natixis, New York Branch, BNP Paribas and Goldman Sachs Bank USA acted at joint bookrunners.

JPMorgan Chase Bank, NA acted as administrative agent; Bank of America, NA, MUFG Union Bank NA, the Bank of Nova Scotia, U.S. Bank NA and Fifth Third Bank, as co-syndication agents; and TD Bank, NA, Wells Fargo Bank, NA, Natixis, New York Branch, BNP Paribas and Goldman Sachs Bank USA, as co-documentation agents.

At closing, $1.45 billion of the term loan was contributed to MSG Spinco, the spun off entertainment and sports businesses, in connection with the distribution by Madison Square Garden Co. of the common stock of MSG Spinco, Inc. to Madison Square Garden Co. stockholders, which is expected to occur on Sept. 30. The remainder of the term loan will be used by MSG Holdings to pay expenses related to the sports and entertainment business’ spinoff from the media business and to fund working capital needs and other general corporate purposes.

The revolver was undrawn at closing and will be available to fund working capital needs and other general corporate purposes of MSG Holdings. Up to $35 million of the revolver is available for the issuance of letters of credit.

The credit agreement generally requires MSG Holdings to comply with a maximum total leverage ratio of 6 to 1 until Sept. 30, 2016 and a maximum total leverage ratio of 5.5 to 1 from and after Oct. 1, 2016.

The credit agreement replaces MSG Holdings’ prior credit agreement dated May 6, 2014, which was terminated.

New York-based Madison Square builds sports, media and entertainment brands. Once spun off, the sports and entertainment business will be called the Madison Square Garden Co. and the media business will be renamed MSG Networks Inc.

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