Emmis Communications' $1.4 billion credit is emerging as one of the strongest media deals in the market as the credit continues to trade above par. Last week a $5 million piece traded at 100 3/4, slightly higher than its previous level two weeks ago at 100 1/4. "It's a solid name with lots of cash," one trader said simply. Emmis, based in Indianapolis, Ind., owns and operates more than 20 radio stations in New York City, Los Angeles, and Chicago as well as two radio networks. It recently bought Lee Enterprises for $500 million. A company spokeswoman did not return calls seeking comment.
"The pro rata has shown a fair amount of strength. What the agents did in transferring the balance from pro rata to the term loan 'B' patched the deal up," said a market watcher who follows the name. "It seems to have been significant enough to give the deal some pretty strong momentum." He believes that with few broadcasting names in the secondary market, Emmis' credit is at an advantage. "There aren't that many broadcasting names on the 'B' side, but there's a ton of cash out there. There are few broadcasting names that people can call strong credits, and this is one of them." Another market watcher agreed, adding that because the company runs local programming, rather than national, it's less affected by a slowing economy.
The company shifted $250 million of the pro rata to the term loan "B." Some dealers said the move was fairly routine at a time when demand for pro rata was low, while others questioned the strength of the credit (LMW, 1/8). Moody's Investors Service gave the credit a Ba2 rating due to the company's strong management and recent acquisitions. Emmis has announced or consummated $1.3 billion in acquisitions over the last year. Toronto-Dominion Securities leads the deal. First Union Bank, Credit Suisse First Boston and FleetBoston Financial are the mandated arrangers.