Source Interlink plans credit facility, bonds for purchase of Enthusiast Media

By Sara Rosenberg

New York, May 14 - Source Interlink Cos. Inc. plans on getting a new credit facility and issuing high-yield bonds to fund its acquisition of Primedia Inc.'s Enthusiast Media division, company officials said in a conference call Monday.

Citigroup is the lead bank on the financing.

Based on the expectation that this deal will likely be a single-B credit, and subject to market conditions, the company anticipates that the bank deal will initially carry pricing of Libor plus 250 basis points and the bonds will likely price in the high 9% area, officials said in the call.

Source Interlink is buying the Enthusiast Media division, which is comprised of over 70 magazine titles and 90 Web sites, for $1.178 billion in an all-cash transaction.

The combined companies are estimated to generate $2.4 billion in revenue and more than $180 million in EBITDA on an annualized basis.

The transaction is expected to close mid-summer, subject to regulatory approvals and other customary closing conditions.

Primedia plans to use proceeds from the sale to repay its credit facility debt, redeem its senior floating-rate notes due 2010 and 8 7/8% senior notes due 2013, and tender for its 8% senior notes due 2011.

Source Interlink is a Bonita Springs, Fla., provider of merchandising and fulfillment services for home entertainment products.

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