Looking to fund two acquisitions and refinance existing debt, NextMedia Group turned to Goldman Sachs and GE Capital for $335 million in financing. "We did the facility to refinance existing bonds that have been outstanding for four or five years, so they had a high coupon rate," explained Sean Stover, cfo. "Interest rates have come down and the company is more stable and able to operate in the bank market. We accessed the bank market to refinance bonds and refinance an existing credit facility and to provide capital for further growth."
Further growth could be organic in nature or through further acquisitions. Englewood, Colo.-based NextMedia recently signed a deal to acquire two radio stations in San Jose, Calif., from Infinity Broadcasting. Stover said the company is just awaiting regulatory approval and expects to close the transaction in the next 60 days. The company, which also works in the outdoor and indoor advertising spaces, will be more likely to grow in the outdoor space than in the radio space, Stover said. They also have plans to amortize debt due to a nice cash flow.
The company previously had $200 million of high-yield bonds, which were placed in 2001, at a 10 3/4% coupon and led by Credit Suisse First Boston. It also had a $125 million revolver led by GE in place. With interest rates lower, NextMedia thought it would be able to get better pricing. The new facility consists of a $75 million revolver, a $260 million term loan "B" and an $80 million second lien. Pricing is LIBOR plus 2% on the first lien and LIBOR plus 4 1/2% on the second lien. "We were very pleased with their pricing and structure," Stover explained.
Of the leads, Stover said, "Goldman Sachs has tremendous syndication capabilities in the public equity markets, as well as in the debt markets, including high yield, and they have carried that syndication over into the bank market. I think they are a top-tier syndicator who really knows the media space; that was the primary reason for selecting Goldman Sachs." He added about GE, "We have had a long term relationship with GE, where they have used their balance sheet to provide capital. They know us very well and are happy to hold a significant portion of the credit and are very good bank admin-agents."
In July the company announced it had signed an agreement to acquire KEZR-FM and KBAY-FM from Infinity, which is a unit of Viacom. "San Jose is the 10th largest city in the U.S. and a very good market that is fast growing and the stations are general market stations," Stover said. "I think they have not been given the kind of attention they might have needed or deserved so we think it is a terrific position in a fast growing market."