Warner Music Group to repay some term loan with notes proceeds from $500 million offer

By Sara Rosenberg

New York, May 19 - Warner Music Group Corp. plans on repaying a portion of its term loan debt using proceeds from a $500 million senior secured notes offering, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

As was previously reported, the company is trying to amend its credit facility to extend the maturity date of the term loans to January 2014 from February 2011, and in exchange, pricing would be increased and a Libor floor would be added.

The amendment would also allow the company to obtain the new bonds and fix financial maintenance covenants at set levels.

In connection with the proposed amendment, the company would voluntarily prepay $300 million of its term loans using cash on hand and would reduce the revolver size to $150 million from $250 million.

The repayment that would come from the bond proceeds would be in addition to that $300 million paydown from cash on hand.

Completion of the offering is conditioned upon the successful completion of the portion of the amendment that permits the incurrence of the notes and allows them to be secured equally and ratably with the same collateral that would secure the remaining term loans.

The amendment and extension, however, are not conditioned on the notes offering and the company intends to proceed with the proposal even if the notes deal doesn't happen.

Warner Music is a New York-based music content company.

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