Smaller Company Hits Big With New Debt

Emmis Communications' decided to downsize its business and focus on its radio and publishing assets by getting out of the television station market.

  • 12 Jan 2007
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Emmis Communications' decided to downsize its business and focus on its radio and publishing assets by getting out of the television station market. During the time the company was cutting assets, it found its old credit facility was too large for the new, smaller company and hit up the bank loan market.

The Indianapolis-based media firm tapped Bank of America and Deutsche Bank for a smaller, $600 million credit. The deal consists of a six-year, $145 million revolver, with availability for $50 million of letters of credit, and a seven-year, $455 million "B" term loan (CIN, 10/13).

The company's existing $1.025 billion credit facility had an asset-sale requirement, said Patrick Walsh, cfo. The deal was led by a syndicate of banks including B of A, Goldman Sachs, Wachovia Securities, Deutsche Bank and Credit Suisse.

Emmis announced in May 2005 it was seeking strategic alternatives for its television assets to reduce debt and put the company in the position for growth. It had sold off 14 of the 16 stations as of Jan. 11. "We have been very successful meeting expectations for sale prices," Walsh said, commenting that the best use of proceeds was to give back to the shareholders.

Walsh said the principal reason for taking out the new debt was to pay a $150 million dividend, or $4 per share, to shareholders. It also allowed the company to refinance the existing debt. "It changed the capital structure of the company," he said.

  • 12 Jan 2007

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