Emmis, Lender Amend Credit Agreement
March 30, 2011 at 4:20 AM (PT)
EMMIS has reached a deal with its lenders to amend its credit agreement. The deal includes a backstop letter agreement with CANYON CAPITAL PARTNERS under which CANYON agreed to the credit changes and to buy loans necessary to provide the necessary lender consent to the changes in exchange for a 6% (or 3% within the first six months) exit fee on existing Tranche B Term Loans and revolving credit agreements.
The amendments provide that the terms of the existing Tranche B Term Loans held by CANYON funds have been changed to extend the maturity date to NOVEMBER 2014 and pricing has been increased under a grid with 7.5% to 12.25% per annum to be paid in cash and 7 to 0% per annum to be paid in kind, subject to a minimum yield of 12.25% per annum; in addition, the leverage ratio and fixed charge covenants will not apply until NOVEMBER 30th, 2012, and then be set at 5x and 1.15x, and a minimum EBITDA test of $25 million per rolling 4 quarter test period will be in effect from NOVEMBER 30th, 2011 through AUGUST 3st, 2012; the requirement that annual audits be certified without qualification will be waived for the fiscal years ending FEBRUARY 2011 and 2012; and the ability of EMMIS to engage in certain activities or transactions, including the payment of dividends, the incurring of indebtedness and the ability to invest certain proceeds including from asset sales will be further restricted or prohibited.
"Today's announcement provides EMMIS with a significant opportunity to address our capital structure and gives us the flexibility we need going forward as our business continues to grow and gain momentum," said EMMIS Chairman/CEO JEFF SMULYAN.