Cumulus Media completed an amendment to its $325 million term loan that cuts pricing by 25 basis points and provides an option for another leverage-based price cut. The loan was originated in March 2002 as a "B" loan and was amended and expanded in April 2003 as a "C" loan. The new amendment converts the loan into a "D" tranche, according to Martin Gausvik, executive v.p., cfo and treasurer of Cumulus. The amendment cuts pricing on the facility from LIBOR plus 21/2% to LIBOR plus 21/4%. "When leverage goes below four times, the spread will drop to LIBOR plus 2%," Gausvik said.
J.P. Morgan and Bank of America lead the facility, which also includes a $112.5 million "A" loan and $112.5 million revolver, of which $41 million in drawn. The amendment does not affect pricing on the revolver or "A" tranche. Gausvik believes the bank chose to change the "C" to a "D" because "it's just easier to flush out and put a new one in place, in case some participants want to drop." There was good demand for the loan, Gausvik said. "There may have been a couple of guys that dropped, but they were very insignificant," he added. He cited market conditions as the impetus for the amendment. "I'm always looking to reduce my interest rates," Gausvik said. "The loan market is very strong. There is huge demand for this institutional component." Cumulus media owns about 290 radio stations.