Lehman Brothers, Merrill Lynch and Wachovia Securities are providing a new facility for Spanish Broadcasting System. The credit consists of $400 million worth of term loans, including a $300 million first lien and a $100 million second lien, along with a $25 million revolver, according to a Securities and Exchange Commission filing. Spanish Broadcasting owns and operates 20 Spanish-language radio stations in the U.S. and Puerto Rico. Joseph Garcia, executive v.p., cfo and secretary, did not return calls.
The funds will be used to repay the Miami-based company's existing facility, which has $123 million outstanding, and retire all of its outstanding $335 million 9 5/8% senior subordinated notes due 2009. The company also has $87 million in debt-like preferred stock. This will reduce the interest rate and increase the undrawn revolver by $15 million.
According to Standard & Poor's, the company is planning to repay the second-lien debt with the proceeds from the pending sale of two Los Angeles radio stations. S&P warns the debt reduction may be short-term. It still has concerns over the potential for further debt-financed acquisitions. S&P rated the first-lien debt B+ and the second lien CCC+.
Moody's Investors Service assigned a B1 rating to the revolver and first lien and a B2 rating to the second lien.