Media General eyes $2.8 billion in loans, bonds for Meredith purchase

By Sara Rosenberg

New York, Sept. 8 – Media General Inc. has received a commitment for $2.8 billion in financing to help fund its acquisition of Meredith Corp. that is expected to come in the form of term loans and bonds, company officials said in a conference call on Tuesday.

RBC Capital Markets and JPMorgan Chase Bank are the lead banks on the debt.

“We will very quickly start marketing that to a broader audience,” officials added about the financing.

Under the agreement, Meredith stockholders will receive cash and stock valued at $51.53 per share, for a transaction value of about $2.4 billion. Based on Meredith’s net debt balance of $772 million at June 30, the transaction enterprise value is around $3.1 billion.

Media General has formed a new holding company, which after closing will be named Meredith Media General. Media General shareholders will receive one share of the new holding company for each share of Media General they own upon closing. Meredith shareholders will receive $34.57 in cash and 1.5214 shares of the new holding company for each share of Meredith they own upon closing.

Pro forma net leverage at closing is expected to be less than 5.5 times.

Significant free cash flow is anticipated to be used to rapidly pay down debt so that within two years leverage will be in the 3 to 3.5 times range, officials remarked in the call.

Pro forma annual revenues of the combined company will be $3 billion and EBITDA will be over $900 million.

Closing is expected by June 30, 2016, subject to approval of Media General and Meredith shareholders as well as customary closing conditions and regulatory approvals, including approval by the Federal Communications Commission and clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Media General is a Richmond, Va.-based television broadcasting and digital media company. Meredith is a Des Moines, Iowa-based media and marketing company.

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