RICHMOND, Va., Aug. 5, 2013 /PRNewswire/ -- Media General (NYSE: MEG) today announced that it has entered into a new credit agreement with a syndicate of lenders in connection with its pending merger with Young Broadcasting. The new credit facilities, which are contingent upon the closing, consist of a $60 million, 5-year revolving credit facility and a $885 million, 7-year term loan. The revolving credit facility interest rate is LIBOR plus 2.75%. The term loan interest rate is LIBOR plus 3.25%, with a 1.00% LIBOR floor.
As Media General announced on June 6, 2013, the company has entered into a merger agreement with Young Broadcasting, which is expected to be completed in the late third quarter or early fourth quarter of this year.
"The merger of Media General and Young Broadcasting is a transformational event for both companies," said George L. Mahoney, Media General's president and chief executive officer. "Among its many benefits, the combination offered an opportunity to refinance our total debt at a significantly lower cost. This became a priority for us."
"Today's announcement puts the new Media General on an even stronger footing than planned. We had anticipated approximately $15 million of financing synergies as a result of the transaction. In fact, these synergies are nearly doubling, to $29 million. Our pro forma cash interest will be approximately $39 million annually, based on current LIBOR levels, compared with the two companies' current standalone annual interest expense of approximately $75 million. This is a significant free cash flow pick-up for our company," said Mr. Mahoney."We're delighted with this momentum. Our new financing was very well received by debt investors, including our relationship banks, and our new term loan was meaningfully oversubscribed. We very much appreciate the support of the credit community and this opportunity to greatly strengthen our balance sheet and to continue to improve our credit profile."