Wachovia Securities' $450 million bank deal for Atlanta-based Gray Communications Systems blew out within a day of launch after a bank meeting on Sept. 9. "Syndication is proceeding well," said Jim Ryan, cfo of Gray -- who would not be drawn into whether the deal would be flexed or not. "We're a name known in television and we have a proven track record in the debt markets. Gray did a loan deal one year ago in a very difficult bank market," he added, commenting on why the company thought bank debt investors would be receptive to a loan from the seasoned issuer.
The bank deal, which is rated Ba3/B+, was launched after the successful pricing of $100 million of 91/ 4% senior notes at par and backs the $502.5 million acquisition of Stations Holding Company, which comprises 15 of Benedek Broadcasting's stations. Bank of America and Deutsche Bank were brought in on the bonds, a banker familiar with the deal noted. Wachovia is administrative agent on the bank deal, B of A is syndication agent, and Deutsche Bank is documentation agent on the loan side, a banker said. In addition to financing the acquisition, the loan refinances an existing $250 million credit, comprised of a $200 million "B" loan and a $50 million revolver.
The new loan comprises a $75 million revolver priced at LIBOR plus 3% and a $375 million "B" term loan priced at LIBOR plus 31/ 4%. "We think we have a prudent mix of subordinated and senior debt and equity," Ryan said. The acquisition is being funded with the contribution of $275 million of common equity.