Digitally driven and Hispanic market-rooted media company Entravision Communications has entered into “a strategic amendment” to its all-important credit agreement. Why? “The move is intended to increase the company’s financial stability and accelerate debt reduction.”
This, the company led by Michael Christenson, is designed to lower Entravision’s financial risk through the term of its credit facility, which matures in March 2028.
Specifically, publicly traded Entravision’s scheduled quarterly term loan payments increased to $5 million from $2.5 million. This follows a voluntary pre-payment of $10 million in Q2 and “further strengthens the company’s low leverage ratios,” Entravision shared in a Wednesday announcement.
Additionally, Entravision’s revolving credit facility commitments decreased to $30 million from $75 million, “optimizing available liquidity while reducing commitment fees.”
Then, there is the “enhanced financial stability” that Entravision intends to gain from the initiative. How so? The net leverage ratio will be calculated on a trailing eight-quarter basis, instead of a trailing four-quarter basis; the maximum permitted net leverage ratio increased to 4.0x from 3.25x.
“These changes are intended to moderate the effects of cyclical political advertising revenue, and provide a more stable leverage profile and greater operational flexibility,” Entravision said.
For CFO Mark Boelke, “Reducing debt is a key priority for Entravision that will provide operational and financial stability and flexibility. The media industry is undergoing unprecedented changes and this amendment provides us with additional financial flexibility to navigate these changes and build shareholder value.”
Entravision’s Administrative and Collateral Agent is Bank of America, while JPMorgan Chase Bank, Wells Fargo Bank, RBC, Texas Capital Bank, and CIBC Bank USA are serving as revolving lenders and Term Lenders.
