Central European Media reduces borrowing costs on loans by 125-175 bps

By Angela McDaniels

Tacoma, Wash., March 6 – Central European Media Enterprises Ltd. completed a transaction with Time Warner Inc. to reduce the fees payable to Time Warner as credit guarantor of the company's senior term credit facilities, according to a company news release.

The transaction reduced the company’s weighted average borrowing cost by 150 basis points to 7.25%, its cost of borrowing on the €251 million term loan due 2018 and the €235 million term loan due 2019 each by 125 bps and its cost of borrowing on the €469 million term loan due 2021 by 175 bps.

The all-in rate now applicable to all currently outstanding senior term credit facilities can fall as low as 5%, depending on the company’s net leverage ratio. This will automatically improve in the future with specified decreases in the net leverage ratio.

The cost of borrowing will decrease another 50 bps if the total of outstanding senior term credit facilities is reduced below €815 million by Sept. 30, 2018, subject to certain adjustments.

The company expects the transaction to result in at least $30 million of savings from debt service obligations by the end of next year, accelerating the company's deleveraging strategy, which already included plans to substantially repay its nearest debt maturity in 2018.

The transaction was completed with no changes to the company's existing debt prepayment rights and no changes to its existing revolving credit facility.

The company has reduced the average cost of borrowing by 450 bps over the last year, according to the news release.

“The new grid pricing, now applicable to all of our term debt, results in an immediate and significant reduction to our cost of borrowing, reduces our potential future financing costs and maintains the current flexibility of our debt structure. These savings better position us to deliver on our plans to reduce leverage and improve the company's financial position,” co-chief executive officers Michael Del Nin and Christoph Mainusch said in the news release.

Central European Media is a media and entertainment company operating in six Central and Eastern European markets and based in Hamilton, Bermuda.

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