Monitronics trims revolver, splits term loans, increases pricing

By Marisa Wong

Morgantown, W.Va., Nov. 15 – Monitronics International, Inc. entered into an amendment on Nov. 13 to the credit agreement dated March 23, 2012 with Bank of America, NA as administrative agent to reduce revolving credit commitments to $250 million, according to an 8-K filing with the Securities and Exchange Commission.

The amendment also splits the existing term loan under the credit facility into two separate classes and removes Monitronics’ ability to incur incremental equivalent debt under both the revolver and the term loan.

In addition, the amendment increases the interest rates and amends some financial covenants.

The amendment also modifies the credit agreement to permit the issuance of new 5½%/6½% senior secured second-lien notes.

The term loan now consists of an extending term loan portion and a non-extending term loan portion.

The non-extending term loan matures on the earlier of 181 days prior to the scheduled maturity date of Monitronics’ outstanding 9 1/8% senior notes due 2020 if any notes remain outstanding on that date (the springing maturity date) and Sept. 30, 2022.

The extending term loan matures on the earlier of the springing maturity date, solely if more than $22.5 million principal amount of 9 1/8% notes is outstanding on such date, and Sept. 30, 2022.

The revolver matures on the earlier of the springing maturity date, solely if more than $22.5 million principal amount of 9 1/8% notes is outstanding on that date, and Sept. 30, 2021. However, if Monitronics makes a voluntary prepayment of non-extending term loans (or without the consent of the majority of the lenders under the revolver if any payment of non-extending term loans is made on or after the maturity date thereof) or less than all of the lenders under the revolver are parties to the loan amendment, the revolver will mature 181 days prior to the springing maturity date if any 9 1/8% notes remain outstanding on that date.

The non-extending term loan requires quarterly interest payments and quarterly principal payments of 0.25% of the principal amount outstanding.

The extending term loan requires quarterly interest payments and quarterly principal payments of (i) beginning with the first full fiscal quarter ending after the effective date of the amendment and for the succeeding seven fiscal quarters after that, $9,375,000, less amounts payable with respect to the non-extending term loan, up to an aggregate amount of $75 million for all such payments under the term loan, and (ii) beginning with the ninth fiscal quarter ending after the amendment effective date, 0.25% of the outstanding principal amount of the extending term loan.

The non-extending term loan bears interest at Libor plus 550 basis points, subject to a 1% Libor floor.

The extending term loan bears interest at Libor plus 650 bps, subject to a 1% Libor floor.

The revolver bears interest at Libor plus 400 bps for revolving loans held by lenders that do not consent to the amendment and 475 bps for revolving loans held by lenders that consent to the amendment, in each case subject to a 1% Libor floor. There is a 50-bps commitment fee on unused portions of the revolver.

The loan amendment will become effective once some conditions are met on or prior to Jan. 31. These conditions include, among others, the issuance of the second-lien notes, the receipt by Monitronics of $75 million in cash from Ascent Capital Group, Inc. and the issuance of a ruling in a convertible noteholder action denying the plaintiff’s motion for a preliminary injunction.

As previously reported, Monitronics launched an offer to exchange its existing 9 1/8% notes due 2020 for new 5½%/6½% second-lien notes due 2023. The exchange is conditioned on the amendment to the credit facility. The exchange offer expires on Dec. 10.

Monitronics is a Dallas-based home security alarm monitoring company. Parent company Ascent Capital is a holding company based in Englewood, Colo.

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