Citigroup and Barclays last week launched syndication of Thomson Media's new credit with the first lien being offered at LIBOR plus 2 3/4% and the second lien going out at LIBOR plus 6%. The credit backs Investcorp's $350 million acquisition of the financial media company from Thomson Corp. The credit comprises a $35 million revolver, $160 million "B" loan and $40 million second-lien "C" loan.
Investcorp will contribute $160 million in private equity and Thomson Media's parent, Thomson Holdings, will issue $17 million in senior notes. Leverage is 6.7 times. "There is plenty of leverage, although if you look at it just through the banks its lower because of the notes embedded in the equity," a loan investor noted. At the bank meeting an Investcorp official said the company is not looking to do acquisitions and is going to bring leverage down from cash flow, said an attendee. "Investcorp generally does the right thing with their credits," another investor noted. "They're one of the few sponsors that have actually put money back into a company when it goes sideways."
A potential investor said one issue he is considering is that Thomson Media is focused on just one industry--finance. He compared Advanstar Communications, a publisher of trade magazines that covers many sectors, to Key3Media Group, which ran into trouble because it only served the technology space. "If you have something where it's serving a variety of different industries, if one industry gets into trouble you have the others," he explained. "This thing is completely financial services. If you get a downturn in financial services as we had in 2002 it's tough because you don't have anyone else there to pick up the slack." William Johnston, Thomson Media's cfo, referred calls to Investcorp officials, who did not return calls. Officials from the lead banks either declined comment or did not return calls.