Moody’s still mulling Media General ratings


Moody'sMoody’s Investors Service has taken note of the successful refinance move by Media General to amend its senior credit facility and push out the maturity date. But there are still issues to be dealt with, so Moody’s has left Media General’s credit ratings under review for potential downgrade. The TV/newspaper/online company has some $300 million of debt rated by Moody’s.

“The amendment partially resolves certain aspects the review but leaves open other material considerations, including a requirement that Media General complete at least a $225 million bond offering by May 25, 2012 and use the bulk of the proceeds to repay its term loan as a condition to extending the credit facility maturity to March 2015 from March 2013,” Moody’s noted.

“Moody’s continues to evaluate in the review Media General’s liquidity position, the level of cash interest expense expected upon completion of any transactions, and the company’s ability to generate free cash flow that could be used to reduce debt. The biggest open contingencies are the pricing and size of a bond offering and whether Media General will execute on asset sales that would reduce its very high leverage,” said the ratings agency.

“Transactions that provide Media General the ability to generate meaningful free cash flow and repay debt, as well as significantly reduce refinancing risk could lead to confirmation of the existing ratings. Transactions that result in interest expense consuming all or most of the company’s unlevered cash flow could lead to a downgrade,” Moody’s said.

The analysis from Moody’s found both good and bad in the loan amendment. On the plus side, it gives the company more financial flexibility. But it also increased the interest costs and reduced the available revolver from $70 million to $45 million.