MediaNews Group chose Bank of America to refinance its credit facility after forming a close relationship with the bank during its fight to win Freedom Communications. B of A had been the company's investment banker and lead bank for that deal, noted Ronald Mayo, v.p. and cfo for MediaNews. In September, the company made an offer to acquire all the common stock of Freedom as a part of an auction process. Although the company's bid ultimately failed, the bank demonstrated its capability during that time and MediaNews wanted to give B of A business when the next opportunity arose, Mayo added. Bank of New York led the company's former facility.
The new loan comprises a $350 revolver and a $250 million term loan. Pricing on the revolver is LIBOR plus 13/4% and pricing on the term loan is 2%. Both spreads are based on a grid tied to leverage. The company refinanced its credit facility in anticipation of a significant ramp up in amortization, said Mayo, adding that the amortization would have caused some issues with the company's business plan. He noted that the issuer-friendly bank loan market also influenced the company's decision to refinance.
The company initially completed a $350 million credit facility in 1999. The facility was amended in January 2001 to provide for a $125 million "A" term loan, which was increased to $150 million in February 2001. The company tapped the market for another amendment in May 2003 and added a $97 million "B" loan. In conjunction with the amendment, the availability under the revolver was reduced to $253 million.