Salem refinances $40 million revolver, gets $9 million commitments

By Susanna Moon

Chicago, Nov. 21 - Salem Communications Corp. refinanced its loans last Tuesday through a credit agreement under which Bank of America, NA assigned its roles of administrative agent, swingline lender, letter-of-credit issuer and lender to Wells Fargo Bank, NA, according to an 8-K filing with the Securities and Exchange Commission.

The facility remains a $40 million revolving credit facility, including a $5 million subfacility for standby letters of credit and a $5 million subfacility for swingline loans.

The agreement extends the maturity to Dec. 1, 2014 from Dec. 1, 2012.

Interest on the loans will be Libor plus 225 basis points to 350 bps based on leverage. The commitment fee will be 40 bps to 75 bps.

If a default occurs, interest may be increased by 200 bps.

Amounts drawn under the facility may be paid and then reborrowed.

Affiliate lines of credit

The company also entered into separate binding letters of intent last Thursday with Edward G. Atsinger III, chief executive officer and director of Salem, and Stuart W. Epperson, chairman of Salem's board of directors.

Under the terms, Epperson will provide an unsecured revolving line of credit to Salem for up to $3 million, and Atsinger will provide an unsecured revolving line of credit for up to $6 million.

Proceeds may be used to repurchase some of Salem's outstanding senior secured notes. Interest on these loans will be the lesser of 5% per year and the maximum rate permitted for subordinated debt under the agreement, set at Libor plus 225 bps to 350 bps.

Interest is payable at the time of any repayment of principal.

Any loans under the affiliate lines of credit must be repaid within thee months of drawdowns.

The debt under these terms is subordinated to the debt under the Salem facility. The affiliate lines of credit do not contain any covenants.

Salem Communications is a Camarillo, Calif.-based commercial radio broadcasting company.

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