A J.P. Morgan-led arranger group is seeking recommitments on Tribune Co.’s term loan by 5:00 p.m. EST today after flexing down pricing to L+300, with a 1% LIBOR floor, offered at 99.75, sources said. In addition, the 101 soft call premium was trimmed to six months from one year.
Leads J.P. Morgan, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, and Credit Suisse originally talked the $3.8 billion, seven-year term loan at L+350, with a 1% LIBOR floor, at 99, sources said. As revised the loan would yield 4.11% to maturity.
The term loan, along with a $300 million, five-year revolver, will back Tribune Co.’s planned acquisition of Local TV from Oak Hill Capital Partners.
The loan drew BB+/Ba3 ratings, along with a 1 recovery rating from Standard & Poor’s. Tribune is rated BB-/Ba3.
Tribune in July agreed to purchase Local TV’s 19 television stations for $2.725 billion in cash. Tribune will also refinance its existing debt alongside the purchase and is spinning off its publishing assets into an independent company, ultimately leaving a pure-play broadcaster. In a July statement, the company said it would develop “detailed separation plans” over the next 9-12 months.
With the purchase, the media company’s broadcast portfolio will increase to 42 stations, from 23. Tribune expects the merger to generate more than $100 million in annual run-rate synergies within five years of closing.
The transaction will be structured to deliver Tribune a step up in the tax basis of the acquired assets. Taking into account the company’s estimate of run-rate synergies and the present value of this tax asset, the effective purchase-price multiple on a pro forma basis is approximately 7x 2011 and 2012 average EBITDA, the company said.
Tribune’s existing bank debt – a $1.1 billion B term loan and a $300 million asset-based revolver – was put in place in December to back the media company’s exit from Chapter 11. The covenant-lite TLB due 2019 is priced at L+300, with a 1% LIBOR floor.
Local TV, meanwhile, last tapped the loan market in September for a fungible $70 million add-on to its $181 million covenant-lite term loan due 2015 (L+400). The original loan stems from Oak Hill’s 2007 purchase of the New York Times’ Broadcast Media Group, though the company extended the maturity of a majority of its term debt by two years, to 2015, via an amend-to-extend transaction early last year. The company exited Chapter 11 on Dec. 31. – Chris Donnelly