Moody’s rates Townsquare loans Ba2, notes B3

Moody's Investors Service said it assigned Ba2 (LGD2) ratings to Townsquare Media, Inc.'s proposed $255 million senior secured term loan B and $50 million senior secured revolving credit facility and a B3 (LGD5) rating to its proposed $320 million senior unsecured notes. Moody's also moved Townsquare Radio, LLC’s B2 corporate family rating and B2-PD probability of default rating to Townsquare Media and assigned an SGL-2 speculative grade liquidity rating. The outlook is stable.

Proceeds from the new debt instruments will be used to repay outstanding amounts under the existing credit facilities and to redeem the company's 9% senior notes due 2019.

The agency said the B2 corporate family rating reflects the company's high debt-to-EBITDA ratio of 5.9 times as of December pro forma for the proposed refinancing. Although the call premium and transaction fees increase initial leverage, Moody’s expects that the completion of the proposed transaction will result in meaningful cash savings from reduced interest expense.

Ratings also incorporate the mature and cyclical nature of radio advertising demand, risks associated with management's acquisition strategy and ownership by financial sponsors, the agency said.

Moody’s said the company’s ratings are supported by its leading revenue share and audience ratings.

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