Regent Communications is in the market for a $240 million credit facility to fund its acquisition of six radio stations from CBS Corporation. The deal consists of a $70 million revolver, a $125 million term loan "B" and a $45 million delayed-draw term loan, all maturing 2013. Banc of America Securities is administrative agent and joint book runner along with SunTrust Bank on the credit. Pricing is LIBOR plus 2 1/2%.
Cincinnati-based Regent announced June 26 that it would acquire one station in the Albany, N.Y., region for $4.9 million and later announced it's acquisition of five stations serving the Buffalo, N.Y., market for $125 million. Anthony Vasconcellos, cfo, said that CBS had a strategy to sell off stations in 10 market areas and Regent looked at them and was most impressed by the Buffalo market. Regent is a radio broadcasting company focused on acquiring, developing and operating stations in middle and small-sized markets. A CBS spokeswoman declined comment and referred questions to a conference call.
"It's a name that's been around for awhile," said one investor. The credit will also be used to refinance approximately $100 million of existing debt from 2003 led by Bank of Boston, Vasconcellos said. Pricing on the previous facility was based on a grid tied to leverage ranging from LIBOR plus 1 1/2% to LIBOR plus 3% (LMW, 7/20/2003). He noted the company's relationship with B of A actually goes back through a team that originated with Bank of Boston. The team moved to Fleet Bank when it was bought out and then transitioned to B of A when it joined with Fleet. Jamie Lewis, a former managing director at B of A, who retired during Regent's current transaction, was the longest relationship on the team, Vasconcellos said.
Standard & Poor's rated the credit B with a recovery rating of 3 due to the company's high pro forma debt leverage, acquisition-centric growth strategy and increased competition from new media formats. The company's debt leverage will be approximately 7.2 times after the acquisitions. Vasconcellos was not concerned with the increased debt leverage even though it is the highest the company has ever been levered. "Radio broadcasting companies throw off a tremendous amount of free cash flow," he said. "There are many more [companies] levered higher than [7.2 times]. We are focused on de-leveraging and hope to have a pretty significant decrease in debt leverage in the next 10 to 12 months, and be below seven times within the next six months." Moody's Investors Service rated the deal B1.