A $5 million piece of Emmis Communications' bank debt traded up this week to par on the heels of the company's announcement that it will come to market with a $200 million bond deal. Dealers attributed the trade to the bond deal, which would be subordinate to the bank debt and make paper more attractive. Dealers observed initial appetite for the paper early last week following the announcement. "The paper should trade up. We have seen a few retailers sniffing on it today," a trader observed. Another market player predicts the paper will trade up to the 100 3/8 range. "There has been some weakness in the company," he said, giving his take on why the bond deal was done. He noted that the company will make only $160 million in proceeds from the bond deal. Still, another market player says Emmis is still viewed as a strong credit. "Clearly, most investors are watching the fundamentals in the broadcasting industry closely, but most feel that the loan offers good value at par," he said.
Emmis announced last week that it will offer $200 million in senior discount notes, the proceeds of which will be used to fund the acquisition of three radio stations in Phoenix, Ariz., and to pay down a portion of the company's credit facility. Emmis, based in Indianapolis, Ind., owns and operates more than 20 radio stations, primarily in New York City, Los Angeles, and Chicago.
Emmis' levels have bobbed recently with the market anticipating weaker broadcasting earnings following the wrap up of the Olympics and the Presidential election. The last trade two weeks ago put Emmis in the 99 3/8 range. Dealers say that an overall good perception of broadcasting has helped it stay afloat. The company's facility is broken down into a $400 million revolver, a $600 million term loan "A," and a $400 million term loan "B." TD Securities leads the deal. First Union Bank, Credit Suisse First Boston, and Fleet Boston are the mandated arrangers.