Lamar Advertising has called on lead bank J.P. Morgan to cut the interest on its $1.2 billion credit facility following a repricing trend. "The market had gotten so hot that credits like us and others were able to go back and reprice the pricing grid so we took advantage of that," said Keith Istre, Lamar's cfo and treasurer.
The $675 million "B" loan was priced on a leverage-based grid from LIBOR plus 21/4-1/2%. The amendment eliminated the grid and cut pricing down to LIBOR plus 2%. In addition, the "B" loan was decreased $125 million to $550 million, while the "A" loan was increased to $425 million from $300 million. "We want less 'B' and more 'A' because 'A' is cheaper. We're paying 175 on the grid now, we could be at 150 at the end of the first quarter," Istre said. Lamar also has a $225 million revolver. The price cut did not affect Lamar's pro rata, which is priced on a grid at LIBOR plus 13/4%.
Lamar's relationship with Chase Manhattan Bank, now J.P. Morgan, stretches back 21 years. "We needed a bank group for a sizable acquisition in 1983. We went to Chase. They got a group together and we've just been with them ever since," Istre said. "It's been good for both of us. They know us; we pick up the phone if we need something and they're there. We've never let them down on our end."
The bank debt was originally put in place in 1999 to back the acquisition of the outdoor advertising division of Chancellor Media and was reworked in 2003. "The new facility we put in place in '03 pushed out the amortization," Istre said. "Not that we couldn't meet the amortization, but we have other uses for our free cash flow that we think are a better investment than paying down debt at this point in time--preferably acquisitions."