Outfront Media may call notes in June, has plenty of liquidity, cash

By Devika Patel

Knoxville, Tenn., Oct. 5 – Outfront Media Inc. has plenty of liquidity and flexibility due to cash on the balance sheet and an unused revolving credit facility.

“The company may use some of this liquidity to take advantage of a call opportunity for its $400 million of 6¼% senior notes due June 15, 2025. The notes may be called at 103.125 on June 15, 2022.

“[In the last 18 months], we effectively recapitalized the company, brought in preferred investors, a new high-yield bond, amended our credit facility to make sure our liquidity was enough to withstand what none of us could imagine during a pandemic,” executive vice president and chief financial officer Matthew Siegel said at the Deutsche Bank 29th Annual Leveraged Finance Conference on Monday.

“[As] mid-2020 became the end of 2020, we thought we were in an incredibly strong position liquidity- and flexibility-wise.

“Our idea was: Get over-capitalized for defense coming in and for offense coming out of the pandemic, so we think we are ready to be on offense,” he said.

Despite the strong liquidity position, leverage is still too high, at just under 8x net debt to adjusted EBITDA, largely due to decreased EBITDA from the pandemic.

“We have $500 million of cash,” Siegel said.

“We have an unused $500 million revolver.

“Our leverage is higher than we’d like, but I think that’s a case of not enough EBITDA as opposed to too much debt,” he said.

Siegel expects deleveraging to progress as EBITDA returns to normal levels.

“I think as our EBITDA goes back to where it was in 2019, as our revenue goes back to where it was in 2019, with that our leverage should get back to the same range and continue the de-levering trend we had and, in a couple of years, our NTA project deployment slows down and recruitment outstrips spends, our de-levering from that will pick up the pace,” he said.

“So, we feel there’s great financial flexibility, good solid balance sheet with liquidity and opportunity to participate in anything if the industry changes,” Siegel said.

The company may use the excess liquidity to call some notes due in June 2022 and reduce gross debt. It also may consider raising more debt in the capital markets.

“There is a lot of flexibility,” Siegel said.

“There is a call option in June 2022.

“I’d rather spend the money on something interesting, but if we had no better use, we’d use that cash to reduce our gross debt, keep our net debt where it is.

“The capital markets have been very receptive and good friends of the company, so I’d like to think I can go back and raise money if I need it again,” Siegel said.

Outfront Media is a New York-based outdoor media company.

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