RLPC: Extreme Reach to launch financing for DG business acq.

NEW YORK Thu Dec 5, 2013 11:38am EST

NEW YORK Dec 5 (Reuters) - Cross-media video advertising startup Extreme Reach Inc will launch December 9 $495 million in debt financing to fund its purchase of Digital Generation Inc's television ad delivery business, sources told Thomson Reuters LPC.

JP Morgan and SunTrust have committed to arrange the debt financing. The acquisition loan will launch at a 2 p.m. bank meeting in New York.

The transaction is split between a $30 million first-lien revolver due December 2018, a $350 million first-lien term loan B due December 2019, and a $115 million, second-lien term loan due December 2020.

Extreme Reach is buying DG's TV business, including its advertising distribution business unit, for $485 million in cash.

Indicative pricing on the first-lien term loan B is LIB+500-525, with a 1 percent Libor floor. The loan is offered at an original issue discount of 99 with 101 soft call protection. The second-lien term loan is guided at LIB+900-925, with a 1 percent Libor floor. The loan is expected to be issued at a 98.5 discount. The loan will be non-callable in year one, then callable at 102 and 101.

Existing cash, the new debt financing, and new equity from Extreme Reach investors will fund the acquisition.

Spectrum Equity, which invested $51 million in Extreme Reach in May, will invest an additional amount up to $47 million.

DG will use proceeds of the acquisition to pay off all of its outstanding debt and to fund the majority of a planned $3 per share cash distribution to DG stockholders.

Extreme Reach and DG did not return calls for comment. JP Morgan declined to comment.

Needham, Mass.-based Extreme Reach is a provider of cross-media video advertising that span TV, online, mobile and all other video media.

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