New York-based Primedia, Inc. is expected to tap the market soon for a $1 billion refinancing credit with J.P. Morgan Chase and Bank of America as the lead banks.Matt Flynn, treasurer for the media company, noted that the firm is in the fifth year of an existing seven-year credit, and it is prudent to replace current indebtedness. The new credit, also a seven-year deal, comes on the back of a successful $500 million 144A senior note issue, the proceeds of which will be used to refinance the credit and repurchase Primedia's existing 10-year notes. The lead on the existing $1.4 billion Primedia credit is Chase, said Flynn, with three other lead titles.
Bank of New York, Bank of Nova Scotia and Deutsche Bank are lead lenders on the existing credit, noted Flynn. A banker familiar with the deal said Deutsche may not participate in the credit due to tighter pricing and a relatively thin relationship. Bankers there declined to comment. It could not be determined what roles BNY and Bank of Nova Scotia might play in the credit. Flynn said the company is working with banks in a changing market. "The market has evolved since 1996, and relationships change. Primedia primarily considered execution capabilities then pricing and relationship, to determine the banks," he explained. The draft though was done on an individual basis, with some banks on board for idea generation, others pricing, he clarified. Furthermore, those that participated in the note issue are likely to be involved, he added. This included J.P Morgan, Salomon Smith Barney and B of A.
Pricing and structure on the deal is being finalized, said Flynn, though the levels are likely to be conventional. The bonds rate Ba3 and BB-, therefore it is likely that the bank loan will be similar, he added. It is unlikely that the bank loan will be rated independently. The notes issue will also help syndication of the loan because banks like to see access to the capital markets, Flynn added. He referred further questions on the timing of the bank meeting and potential structure to officials at B of A and J.P. Morgan. The previous loan, according to Capital DATA Loanware, consisted of a $900 million revolver, priced at LIBOR plus 11Ž 2%, a $250 million term loan "A" priced at LIBOR plus 11Ž 2% and a $250 million term loan "B" at LIBOR plus 23Ž 4%.
Industry players commented that the market is fairly hungry for the credit and banks are eyeing the upcoming deal closely. Flynn, who expects to see a reasonable mix of institutions participate, describes Primedia as a publishing company with a strong hold in new media.Year 2000 sales totaled $1.7 billion and the firm has more than 230 titles ranging from Lowrider to Modern Bride and also produces the Channel One Network.