It has a loan repayment date coming in under three years. But, there’s an opportunity to delay the full repayment of the funds borrowed for an additional three years — at a slightly higher interest rate. It’s a scenario that’s been commonly seen among various publicly traded media companies in recent years. Now the media entity founded by Cathy Hughes and run today by her son is moving ahead with a debt swap.
Urban One announced following Friday’s Closing Bell for U.S. financial markets that it has commenced an exchange offer that would swap its outstanding 7.375% Senior Secured Notes due 2028 for newly issued 7.625% Senior Secured Notes due 2031.
For Urban One, it’s a move that comes with minimal interest rate increases across the additional three-year term.
While the debt exchange is in motion, Urban One, led today by Alfred Liggins III, has also moved ahead with a tender offer — one that sees the publicly traded company superserving African American consumers purchase up to $185 million in aggregate principal amount of the existing notes for up to $111 million in cash.
What about any instance where the offer proves to be highly popular? Urban One shares:
To the extent Existing Notes in a principal amount greater than $185.0 million are tendered into the Tender Offer, the Tender Offer will be oversubscribed, and Existing Notes accepted in the Tender Offer will be subject to proration, as described below. Eligible Holders will only be entitled to participate in the Tender Offer if they elect to exchange all of their Existing Notes in the Exchange Offer other than those Existing Notes, if any, accepted for purchase in the Tender Offer.
There’s more. In connection with the Exchange Offer, Urban One is also offering eligible holders the right to subscribe to purchase up to $60.6 million in aggregate principal amount of 10.500% first lien senior secured notes due 2030.
Urban One explains: Eligible Holders will only be entitled to participate in the Subscription Offer if they tender all of their Existing Notes in the Exchange Offer only or in the Exchange Offer and Tender Offer. Furthermore, to be eligible to participate in the Subscription Offer, Eligible Holders must tender their Existing Notes at or prior to the Early Tender Date (as defined below) and deliver in cash an amount equal to the purchase price therefor by the Funding Deadline.
A “Backstop Commitment” is in place, thanks to support from noteholders. This will see Urban One pay supporting noteholders a premium in an amount equal to 3% of the total aggregate principal amount of New First Lien Notes issued in connection with the Subscription Offer and the Backstop Commitment, as set forth in the Transaction Support Agreement.
The Transaction Support Agreement includes representations, warranties, covenants and closing conditions customary for agreements of this type, including the condition that a minimum of 98% of the outstanding aggregate principal amount of Existing Notes shall have been validly tendered (and not validly withdrawn) pursuant to the Exchange Offer and/or Tender Offer.
The offers and the consent solicitation will expire at 5pm Eastern on December 15, unless extended or terminated at an earlier date.
Urban One will not accept any tender of Existing Notes that would result in the issuance of less than $2,000 principal amount of Exchange Notes.
The New First Lien Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
Moelis & Company LLC has been appointed as the dealer manager and solicitation agent; D.F. King & Co., Inc. has been appointed as the exchange and information agent, respectively, for the offers and consent solicitation.
