Bear Stearns is leading a $105 million, three-year term loan for Muzak that relaxes financial covenants, refinances existing debt and leaves $27.2 million on the balance sheet. Pricing for the ABRY Partners' portfolio company credit is LIBOR plus 4 3/4%.
The debt replaces a $60 million revolver and a $35 million term loan. Bear Stearns, Lehman Brothers, and co-syndication agents Fleet Bank and GE Capital led the previous line and amended the credit last August when the company faced restructuring charges.
Moody's Investors Service stated that Muzak is going to use the new facility to repay its loans, collaterize outstanding letters of credit and provide liquidity. Still, liquidity remains modest because Muzak no longer has access to a revolver. The rating agency anticipates the company will continue to generate negative free cash flow from operations.
Moody's noted that the ratings reflect the company's highly leveraged capital structure and weak operating performance. The company also has $220 million of senior unsecured notes and $115 million of 9 7/8% notes due 2009. Calls to Robert MacInnis at ABRY were not returned nor were calls to Stephen Villa, Muzak's chief operating officer and cfo. Based in Fort Mill, S.C., Muzak provides business music services.