Media General shifts funds between term loans, cuts B tranche pricing

By Sara Rosenberg

New York, July 24 - Media General Inc. upsized its seven-year delayed-draw term loan B (B1/BB-) to $868 million from $865 million and downsized its delayed-draw term loan A (B1/BB-) to $32 million from $35 million, according to a market source.

Also, pricing on the term loan B was reduced to Libor plus 325 basis points from Libor plus 375 bps and the ticking fee was increased to 50 bps for days 31 to 60 and the full spread thereafter, from 50 bps from days 31 to 105, half the spread from days 106 to 165 and the full spread thereafter, the source said.

In addition, the 101 soft call protection on the B loan was extended to one year from six months and the 18-month MFN sunset provision was removed.

The term loan B still has a 1% Libor floor, an original issue discount of 99 and delayed-draw availability of 12 months.

In addition to the term loans, the company is getting a $60 million five-year super-priority revolver (Ba1/BB).

With the changes to the term loans, the first-out revolver incremental capacity was limited to $20 million, the source added.

The credit agreement includes a total net leverage covenant.

RBC Capital Markets, J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the lead banks on the $960 million deal.

Proceeds will be used to refinance around $765 million of debt at Media General and New Young Broadcasting Holding Co. Inc. in connection with their merger and pay a $50 million cash contribution to Media General's qualified pension plan.

The funding of the delayed-draw term loan will occur in two steps. Upon receipt of regulatory and Media General shareholder approval, which is expected by early fourth quarter, about $540 million will be drawn, and upon expiration of the non-call period on the existing Media General 11¾% 2017 senior secured notes in February 2014, the balance will be funded to repay the notes.

Under the merger agreement, Media General will reclassify each outstanding share of its class A and class B common stock into one share of a newly created class of Media General common stock. Media General will then issue around 60.2 million shares of the new Media General common stock to Young's shareholders so the pro forma ownership split will be around 32.5% Media General shareholders and 67.5% Young shareholders.

On a pro forma basis, 2012 revenues for the combined company were $605 million, including about $115 million of political revenues.

Closing is expected late in the third or early in the fourth quarter, subject to Media General shareholder approval, Federal Communications Commission approval, clearance under the Hart-Scott-Rodino antitrust act and customary third-party consents.

Media General is a Richmond, Va.-based provider of news, information and entertainment. Young is a Nashville, Tenn.-based media company.

The combined company will operate under the Media General name and keep its headquarters in Richmond, Va.

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