LIN TV switched the pricing on its new $175 million "B" tranche from a set spread over LIBOR to a grid-based scheme in order to take advantage of reduced leverage figures. Lead banks J.P. Morgan and Deutsche Bank originally hit the market with LIBOR plus 21/4% pricing. But after the deal oversubscribed the structure was altered to pricing on a leverage-based grid ranging from LIBOR plus 2-21/4%. LIN TV's debt-to-EBITDA multiples of five times sets the current rate at LIBOR plus 2%, said Deborah Jacobson, LIN TV's v.p. of corporate development and treasurer.
The rate was lowered, but still holds room for higher pricing to kick in if leverage goes up. "It was a terrifically compassionate borrower that understood that there is a limit to how low a spread could go," Jacobson said with a bit of humor. She said that it was a compromise between the borrower and its lenders.
The proceeds from the credit were used to retire two debt issues at the LIN Holdings Corp. level. This includes $325 million of 10% senior discount notes due 2008 and $100 million of senior discount add-on notes due 2008. Jacobson said the company wanted to pay off the more expensive bond debt. Scotia Capital, FleetBoston Securities and Morgan Stanley served as co-documentation agents for the credit, while about 25 more lenders signed into the final syndicate, she added. There were several assignments in the secondary market immediately following the credit's closing last month, Jacobson mentioned.
J.P. Morgan is Providence, R.I.-based LIN TV's historical agent, while Deutsche Bank is a new lead. Jacobson said Deutsche Bank has been involved in past LIN TV transactions, including its role as lead underwriter for the network television station company's initial public offering in May 2002.