Sole lead arranger Lehman Brothers and documentation agents Deutsche Bank and Merrill Lynch have pulled in commitments for Spanish Broadcasting Systems. The bank debt will partially finance the remaining $190 million of a $250 million acquisition of Los-Angeles radio station KXOL-FM. The $135 million credit is split into a six-year, $125 million term loan facility and a $10 million, five-year revolver, according to a banker. Pricing on the revolver is LIBOR plus 3%, and pricing on the term loan is currently LIBOR plus 31/2%.
The banker said pricing on the institutional piece "could and probably would change." Any change depends on the commitment levels, which seem to be strong since the deal launched a week last Friday, he noted. Syndication is club-style, but the banker declined to name the institutions that have signed on or exact commitment levels.
In addition to the bank facilities, Spanish Broadcasting is raising $75 million through a private offering of preferred stock which has been rated CCC by Standard & Poor's. The bank debt is rated B+. S&P highlights that the "transaction strains interest coverage and drives up total debt plus debt-like preferred stock to EBITDA to a steep 12 times, leaving the company vulnerable to a downturn in advertising, intensifying competition, or rising interest rates." The banker responded that loan investors should not be too concerned with the effect of the preferred stock. Joseph García, Spanish Broadcasting's cfo, executive v.p. and secretary, did not return calls.