Lead arrangers for Emmis Communications' $1.4 billion credit facility held a pooled sell-down on the pro rata portion and $200 million was reportedly shifted from the pro rata to the "B" term loan as the credit met with some resistance in the market. The moves--generally associated with tough going in the primary market--came even as the deal was touted as a strong credit by a rating agency, illustrating the point that media deals are having the same trouble telecom deals are having.
"It's a rough time to syndicate," one dealer said. "People who used to do BB+ are now doing BBB-. Everyone's just kind of stepped back." The Indianapolis, Ind.-based company owns and operates more than 20 radio stations in New York City, Los Angeles, and Chicago as well as two radio networks. Walter Berger, executive v.p. and cfo, would not comment on any market speculation about a restructuring. "We have not taken out the document publicly, so I cannot make a comment on that," he said last Thursday. A day earlier a company spokeswoman confirmed that the loan had been restructured, but declined to elaborate.
The deal was originally structured as a $400 million revolver, a $600 million term loan "A" and a $400 million "B" term loan. Toronto-Dominion Securities leads the deal. A bank spokeswoman did not return calls for comment. First Union Bank, Credit Suisse First Boston and Fleet Bank are the lead arrangers. Spokesmen for those banks also did not return calls. The dealer said the three lead arrangers don't have much paper left to unload. While the dealer doesn't know the levels at which the paper sold, he said in this case the levels were fixed.
Dealers last week were divided on what the developments meant for the credit in the secondary market. One trader explained that the pooled sell-down process "prevents people from dumping paper and killing each other." A market watcher, while not familiar with the specifics of the deal, said restructuring of this type is fairly common and isn't necessarily an indication of the credit's worth. "It's a symptom of some guys at the top tier who have more paper than they care to have. You can argue that the pooled sell-down is an indication that the pro rata didn't go as well as expected, which is not a surprise," he said. "I don't know that it reflects on the company. It's more where we are in the marketplace. Despite whether Emmis is a good deal, people are saying no."
Late last year 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. It most recently bought Lee Enterprises for $500 million. The company has stakes in international radio stations and has 15 network-affiliated television stations in 12 states in the U.S.