Sinclair plans new loan or capital market transaction for acquisition

By Sara Rosenberg

New York, Nov. 2 - Sinclair Broadcast Group Inc. plans on either getting a new bank loan or accessing the capital markets to fund its $385 million acquisition of Freedom Communications' broadcast assets, including eight stations, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

The new financing will be sufficient to fund the entire purchase price, minus a $38.5 million deposit payable upon approval by Freedom's shareholders, which must be obtained by Nov. 8.

Closing is also subject to approval by the Federal Communications Commission and customary antitrust clearance.

Following receipt of antitrust approval - anticipated to occur within 30 days - and prior to closing of the acquisition, Sinclair will operate the stations pursuant to a local marketing agreement.

Closing and funding is expected to occur late in the first quarter/early in the second quarter of 2012.

In addition to the new financing planned for the Freedom transaction, Sinclair said in September that it expects to get a new term loan, draw on its revolving credit facility and/or use cash on hand to fund its pending acquisition of Four Points Media Group LLC, an owner and operator of seven stations in four markets, from Cerberus Capital Management LP for $200 million.

Officials said in a conference call on Wednesday that a $20 million payment for the Four Points purchase has already been made, and its previously announced financing plans will fund the remaining $180 million.

For the Freedom and Four Points transactions combined, leverage is anticipated to increase minimally - "no more than half a turn" - officials continued in the call, adding that the new assets are expected to generate so much free cash flow that leverage will quickly come back down to pre-acquisition levels.

Closing on the Four Points acquisition is expected during the first quarter of 2012.

At Sept. 30, the company had about $1.14 billion of debt on the balance sheet, net of $61.4 million in cash, compared to net debt of about $1.16 billion at June 30.

Sinclair is a Hunt Valley, Md.-based television broadcasting company. Freedom is an Irvine, Calif.-based media company operating print publications, broadcast television stations and interactive businesses.

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