Sinclair Television Group and “certain affiliated entities” within the Sinclair Inc. family have completed a series of previously announced transactions the publicly traded broadcast TV company believes strengthen its balance sheet and better position it for long-term growth.
In a prepared statement issued following the closing bell for U.S. financial markets on Wednesday, Sinclair President/CEO Chris Ripley said, “The Transactions demonstrate the strong support from our creditors in positioning the Company for long-term success by enhancing our financial liquidity and flexibility.”
He added that the refinancing arrangements push Sinclair’s “closest meaningful maturity to December 2029” and extend all of Sinclair’s maturities to a weighted average of 6.6 years, while “materially reducing” its first lien net leverage and improving the company’s financial optionality, “allowing us to continue to be opportunistic in the marketplace to deleverage over time while driving enhanced returns for all of the company’s stakeholders.”
The Transactions included the following:
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First-Out First Lien Notes. STG completed a private placement of $1,430.0 million of STG’s 8.125% First-Out First Lien Secured Notes due 2033. The net proceeds from the offering were, or will be, used to repay all of the outstanding $1,175 million of aggregate principal amount term loans B-2 under the Company’s previously existing credit agreement (the “Existing Credit Agreement”), to consummate the AHG Notes Repurchase (as defined below), and to pay related fees and expenses related to the Transactions.
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First-Out First Lien Revolving Credit Facility. STG entered into an up to $575.0 million aggregate principal amount first-out first lien revolving credit facility, including a letter of credit sub-facility and a swing-line sub-facility (the “First-Out Revolving Credit Facility”) pursuant to the terms of a new credit agreement (the “New Credit Agreement”). Lenders of $75.0 million aggregate principal amount of revolving loans and commitments outstanding under the Existing Credit Agreement (the “Existing Revolving Credit Facility”) did not participate in or consent to the exchange into obligations under the First-Out Revolving Credit Facility. As a result, such obligations are ranked as third lien obligations under the Existing Credit Agreement, as amended to eliminate substantially all covenants, certain of the events of default and related definitions contained therein (the “Amended Credit Agreement”).
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Second-Out Term Loan Facility. Lenders of approximately $711.4 million and $731.3 million aggregate principal amount of outstanding term loans B-3 and B-4, respectively, under the Existing Credit Agreement elected to refinance and/or exchange such term loans into second-out first lien term loans under the New Credit Agreement (the “Second-Out Term Loan Facility”), consisting of (x) approximately $711.4 million aggregate principal amount term loans B-6 maturing December 31, 2029 offered to lenders of the outstanding term loans B-3 and (y) approximately $731.3 million aggregate principal amount term loans B-7 maturing December 31, 2030 offered to lenders of the outstanding term loans B-4. The remaining approximately $2.7 million of term loans B-3 held by lenders that did not participate in or consent to the exchange into Second-Out Term Loan Facility are ranked as third lien obligations under the Amended Credit Agreement.
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Exchange Offer and Consent Solicitation. Holders of approximately $267.2 million aggregate principal amount of STG’s 4.125% Senior Secured Notes due 2030 (the “Existing Secured Notes”) exchanged such Existing Secured Notes for approximately $267.2 million aggregate principal amount of STG’s 4.375% Second-Out First Lien Secured Notes due 2032 (the “Exchange Second-Out Notes”) as of the early tender time under an exchange offer and related consent solicitation (the “Exchange Offer”). Holders of Existing Secured Notes who do not tender prior to the expiration time of the Exchange Offer will continue to hold Existing Secured Notes under the indenture related thereto, subject to amendments to release all collateral securing such Existing Secured Notes and eliminate substantially all covenants, certain of the events of default and related definitions. As amended, such Existing Secured Notes will become unsecured obligations of STG.
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Private Debt Repurchase. STG agreed to repurchase or redeem for cash approximately $63.6 million aggregate principal amount of Existing Secured Notes at 84% of the principal amount thereof and approximately $104.0 million aggregate principal amount of STG’s 5.125% Senior Unsecured Notes due 2027 at 97% of the principal amount thereof (the “AHG Notes Repurchase”), each together with any accrued and unpaid interest, held by certain parties to the Company’s previously announced transaction support agreement (the “Transaction Support Agreement”). Certain of these repurchases occurred on the closing date of the Transactions. The repurchases that remain are expected to occur as soon as practicable following the closing date of the Transactions.
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Private Exchange Offer. STG agreed to issue to certain holders of the Existing Secured Notes party to the Transaction Support Agreement $432 million aggregate principal amount of STG’s 9.75% Senior Secured Second Lien Notes due 2033 in exchange for $432 million aggregate principal amount of Existing Secured Notes, with accrued and unpaid interest on the exchanged amount of Existing Secured Notes paid in cash. The exchanges are expected to occur over the next three weeks, as previously agreed with such holders.
Pillsbury Winthrop Shaw Pittman LLP and Fried Frank Harris Shriver & Jacobson LLP served as legal advisors to Sinclair.
STG, J.P. Morgan acted as exclusive capital markets advisor to Sinclair in connection with structuring and negotiating the transactions
Acting as counsel is Simpson Thacher & Bartlett LLP. Moelis acted as co-financial advisor to Sinclair in connection with the transactions. Milbank LLP served as legal advisor to an ad hoc group of certain of STG’s creditors, and Perella Weinberg Partners LP served as financial advisor to an ad hoc group of certain of STG’s creditors.
