Radio-giant Cumulus Media has chosen J.P. Morgan and Bank of America to lead a $400 million facility to refinance its former Lehman Brothers-led $175 million credit. The banks were chosen in part because of their capacity to offer the larger credit, said Dan O'Donnell, v.p. of finance for Cumulus. The banks approached the company before the old credit's maturity and the re-structuring process began when it was clear the company would go forward with the acquisition of Aurora Communications and the broadcasting operations of DBBC, he added. The company's cfo, Marty Gausvik, also had a previous relationship with J.P. Morgan.
The larger credit also offers the company lower pricing, which O'Donnell said caused some of the banks that participated on the $175 million credit to bow out. Both credits are priced against a leveraged based grid, but the new credit offers a LIBOR plus 3% peak price compared to the former credit's LIBOR plus 33/ 8% peak price. The decrease in pricing comes with an overall improvement in credit quality, the company's stronger performance over the last year to eighteen months, and the attractiveness of the newly acquired properties, explained O'Donnell.
The new facility comprises a $112.5 million, seven-year revolver, a $112.5 million, seven-year term "A" loan, and a $175 million, eight-year term "B" loan. The former credit facility includes a $50 million, seven-year revolver, a $75 million, seven-year term "A" loan, and a $50 million, eight-year term "B" loan. The new facility also provides the company access to a $150 million incremental facility that could be used to aid future acquisitions.