RLPC: Cumulus Media taps market with $2.23B refinancing loan

NEW YORK Wed Dec 4, 2013 1:58pm EST

NEW YORK Dec 4 (Reuters) - Radio broadcaster Cumulus Media Holdings set terms Wednesday on a new $2.23 billion loan to refinance existing debt, sources told Thomson Reuters LPC.

The Atlanta, Georgia-based company is marketing a $200 million, five-year revolver and a $2.025 billion, seven-year first-lien term loan. The company set indicative pricing of LIB+325-350, with a 1 percent Libor floor, and a 99.5 original issue discount on the new term loan.

Proceeds will refinance the company's current first- and second-lien loans. At September 30, Cumulus had $1.24 billion outstanding on its first-lien term loan due September 2018, and $785.5 million out on its second-lien term loan due September 2019.

The existing first-lien term loan carries a spread of LIB+350 with a 1 percent Libor floor, while the second-lien term loan pays LIB+600 with a 1.5 percent Libor floor.

A lender call for Cumulus is scheduled for 2 p.m. Wednesday. JP Morgan leads the deal.

Cumulus is back after repricing its first-lien term loan a year ago. With this proposed transaction, the company is trying to lower costs on its first-lien loans and taking out higher-cost second-lien loans.

"It's a meaningful improvement in their annual debt service. They will save upwards of $30-35 million in interest costs which adds nicely to their free cash flow generation," said Carl Salas, vice president and senior credit officer at Moody's Investors Services.

Moody's affirmed Cumulus' B2 corporate family rating and assigned a B1 rating to the new $2.025 billion first-lien term loan.

Cumulus joins companies such as mortgage specialty servicer Walter Investment Management, residential and business communications servicer Consolidated Communications, and resort developer Las Vegas Sands that are striking the refinancing wave while it's hot and issuing loans to lower interest costs.

Demand for leveraged loans remains robust. Cash into U.S. leveraged loan mutual funds has maintained a positive streak since the week ended June 20, 2012, according to data from Lipper FMI. Year to date loan inflows have reached $59.7 billion.

A Cumulus spokesperson said this is part of ongoing balance sheet management and debt reduction efforts at the company.

JP Morgan did not return calls for comment.

Cumulus owns and operates commercial radio station clusters throughout the U.S. The company's local radio and digital brands serve over 65 million listeners.

Additional reporting by Lisa Lee.