J.P. Morgan and Bear Stearns last week launched syndication of American Media's add-on $140 million "C" loan to investors with a coupon of LIBOR plus 3%. One investor felt the spread is short of the market's demand. "It's a little tight," he said, pointing to the company's leverage multiples of 6.3 times. Moody's Investors Service rated the add-on Ba3, reflecting several factors including moderate cash flow (see story, page 8). A J.P. Morgan official did not return calls, while a Bear Stearns official declined to comment.
AMI, an Evercore Partners portfolio company, is using the add-on along with a $150 million issuance of senior subordinated notes to back its acquisition of Los Angeles-based Weider Publications for $350 million. The acquisition is structured to allow for a significant step-up in AMI's assets for tax purposes. The company anticipates this structure to provide considerable incremental cash flow on an after-tax basis. Weider consists of seven magazines that include Men's Health, Muscle & Fitness and Shape. Weider's publications will add to AMI's six tabloids and other magazines including The National Enquirer and The Star. Officials at AMI and Evercore could not be reached by press time.