The nation’s No. 4 radio broadcaster has scheduled a bank meeting for Tuesday (Oct. 18) to launch a refinancing of all of its existing senior and unsecured debt.
Entercom Communications expects to enter into a new $520 million senior secured credit facility composed of a $60 million revolving credit facility with a five-year maturity, and a $460 million term loan B with a seven-year maturity.
The transaction will be led by Bank of America Merrill Lynch, Morgan Stanley Senior Funding Inc., RBC Capital Markets, and Wells Fargo Securities as joint lead arrangers and bookrunners, the company said on Monday.
Entercom expects to use nearly all of the proceeds of the term loan to refinance its existing senior secured bank debt of $225 million; call its $220 million in 10.5% senior subordinated notes, including the related call premium; and to pay transaction fees and expenses.
The company’s Series A Perpetual Convertible Preferred Stock will not be redeemed as part of this transaction and will remain outstanding.
As of September 30, 2016, Entercom had $443.6 million of senior debt, capital leases and senior notes and $9.9 million in cash. In addition, Entercom had $27.7 million in perpetual cumulative convertible preferred stock including accrued dividends.
In response to the announcement, Moody’s Investors Service affirmed Entercom’s B1 corporate family rating (CFR) and assigned a B1 rating to the proposed $520 million 1st lien credit facility, which includes a $60 million revolver and a $460 million term loan B.
The probability of default rating was downgraded to B2-PD from B1-PD; the outlook is stable.
Moody’s says the proposed transaction is expected to lead to “substantial interest expense savings,” increase the revolving credit facility to $60 million from $40 million, and extend the maturity of Entercom’s debt structure.
The Ba2 rating for the existing 1st lien credit facility and B3 rating on the outstanding senior note will be withdrawn upon repayment, Moody’s adds, while saying the probability of a default rating was downgraded due to the change from a 1st lien and unsecured debt structure to a 1st lien only structure.
Entercom owns 124 radio stations in 27 markets across the U.S.