RICHMOND, Va., March 20, 2012 /PRNewswire/ -- Media General, Inc. (NYSE: MEG), a multimedia provider of broadcast television, digital media and print products, announced that the company has amended its existing bank credit agreement. The amendments include covenant modifications that will provide the company more flexibility to operate in the current uncertain economic environment. Additionally, the amended agreement provides for an extension of the maturity date of $363 million of bank debt from March 2013 to March 2015, in return for a partial pay down of amounts outstanding.
The trigger for the extension will be raising a minimum of $225 million from the issuance of new notes by May 25, 2012. Of the $225 million, a minimum of $190 million will be applied to pay down the outstanding term loan and an amount determined by formula will be set aside in a liquidity account. The company's revolver is reduced to $45 million with no amount outstanding at this time. In addition to the term loan paydown, the revolver commitment will be correspondingly reduced if the liquidity account funding is increased by more than $15 million.
"We are pleased with the overall parameters of our new financing structure," said Marshall N. Morton, president and chief executive officer. "While interest costs will be higher in 2012, our amended credit agreement will provide Media General with more flexibility to operate, as well as expanded opportunities to reduce total debt through asset sales and pursuit of further refinancing options. Media General will continue to focus on accelerating its digital strategy through expanding paid-content initiatives, seeking beneficial partnerships with other fast-growing online businesses, developing new technology and broadening our product offerings," said Mr. Morton.
The company said it expects operating cash flow in 2012 will cover interest payments, capital expenditures of approximately $20 million and retirement plan contributions of approximately $13 million.The amended bank term loan facility has an interest rate of LIBOR with a 1.5% floor plus a margin ranging from 5% to 7% (and commitment fees ranging from 2.25% to 2.50%), determined by the company's leverage ratio, as defined in the agreement. In addition to this cash interest, the company will accrue payment-in-kind (PIK) interest of 1.5%. PIK interest increases the bank term loan outstanding, is accrued on outstanding balances and is payable in cash on amounts outstanding at loan maturity.
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