Just one year after putting its credit facility in place, Sinclair Broadcasting Group has returned to market to take advantage of the cheaper financing being offered, according to Lucy Rutishauser, treasurer. "The market was favorable to doing this kind of deal," she said, adding that companies with real assets and positive cash flow have been well received. Sinclair also decided to reduce the size of its overall credit from $900 million to $600 million after finding it did not need the extra capacity, she noted.
The new credit comprises a $375 million "B" term loan and a $225 million revolver, both of which are priced at LIBOR plus 21/ 4%. By comparison, the former $300 million "B" term loan held pricing of LIBOR plus 31/ 2% and the former $600 million revolver was priced at LIBOR plus 3%. Rutishauser said the company decided to carve out a larger amount for the new "B" piece because of strong institutional demand for the paper.
The other advantage of the new credit is a payment scheme that offers an element of flexibility. The new revolver does not amortize over time, but rather it has one large bullet payment, Rutishauser noted. This method was an important change for the Hunt Valley, Md., media company because it frees up cash flow, she explained. "We can use that cash and put it back into the company," she added.
The deal was syndicated to the company's existing lenders because Sinclair decided it was best to approach lenders that already have shown an interest in media credits and are familiar with the company. J.P. Morgan led the deal, Wachovia Bank snared the role of syndication agent and Deutsche Bank and BNP Paribas served as co-documentation agents.