Insight Midwest increased and refinanced its bank debt with a Bank of America and JPMorgan-led $2.575 billion credit facility set to close on Tuesday. The deal consists of a $350 million revolver, a $500 million "A" term loan and a $1.725 billion term loan "B." Pricing is LIBOR plus 2% on all tranches, according to an investor.
One investor was turned off by the fact that Insight could be losing some of the assets backing the loan. "The issue is that there's a lot of noise around what the collateral package really is here," he said. Insight Communications and Comcast Cable both have a 50% stake in the company. The investor was troubled that "either party can trigger the end of the partnership and Comcast already said they are probably going to do that. Assets will be divided into equal value and the assets that are retained by Insight will secure the facility," the investor said. "That would increase the leverage and the coupon would go up--you're not getting paid for the risk. There are other cable deals out there that we like more." It could not be determined how syndication was going.
The facility will be used to repay all $630 million of the company's 10 1/2% senior notes due 2010 and part of its 9 3/4% senior notes due 2009. An exact amount could not be determined. The remainder of the facility will be used to refinance Insight Midwest's existing debt. The company currently has a $1.1 billion term loan "C" that was refinanced back in July 2005, shaving 75 basis points and dropping pricing to LIBOR plus 2% (LMW, 7/1/2005). There is also about $675 million in a pro rata tranche priced at LIBOR plus 1 1/2% that is expected to be refinanced.
When Insight refinanced its debt back in 2005, its term loan "B," which was refinanced into term loan "C," traded actively and was quoted at 101 3/8-101 5/8, indicating strong demand (LMW, 7/1/2005). Calls to an Insight spokesman were not returned.