Nexstar secures financing for $4.6 billion acquisition of Media General

By Lisa Kerner

Charlotte, N.C., Jan. 27 – Nexstar Broadcasting Group, Inc. has received committed financing totaling $4.7 billion from BofA Merrill Lynch, Credit Suisse and Deutsche Bank to fund its acquisition of Media General, Inc., according to executive vice president and chief financial officer Tom Carter.

“Cash consideration will be funded through a combination of new loans and bonds,” said Carter during a conference call on Wednesday.

“We have enough debt to refinance all of Media General’s debt as well as Nexstar’s first-lien debt and to pay the cash consideration of the stock purchase,” he said.

Carter expects post-transaction leverage to be about 5.5 times blended but said the combined company will benefit from free cash flow during the second half of the year from significant political ad revenues. Nexstar prefers a level of four times “plus or minus,” Carter said.

During the question and answer session, Carter highlighted the combined company’s expected free cash flow of more than $500 million, giving it adequate resources to make accretive acquisitions and to return about $48 million to shareholders.

Carter declined to give specifics on secured versus unsecured debt, preferring to “not hand everybody the playbook.” However, he did say the Nexstar bonds will stay in and that the mix of debt will be determined closer to the time the company approaches the market. Carter also said that the company has “no aspiration” to achieve an investment-grade rating.

Transaction details

Under the companies’ definitive merger agreement, Nexstar will acquire all outstanding shares of Media General for $10.55 per share in cash and 0.1249 of a share of Nexstar class A common stock for each Media General share. The transaction is valued at $17.14 per share, or $4.6 billion, and includes the assumption of Media General’s debt.

The agreement includes potential additional consideration in the form of a contingent value right entitling Media General shareholders to net cash proceeds as received from the sale of Media General’s spectrum in the Federal Communication Commission’s upcoming incentive auction, a news release said.

Nexstar will change its name to Nexstar Media Group, Inc.

Also, Nexstar paid a $60 million termination fee to Meredith Group and gave the company certain first look rights. Media General had agreed to purchase the Des Moines-based media and marketing company in September.

“Financially, the transaction is expected to more than double our revenue and adjusted EBITDA and result in over $500 million of annual free cash flow which we intend to allocate to leverage reduction, additional strategic growth investments and the return of capital to shareholders,” said Nexstar chairman, president and chief executive officer Perry Sook.

The transaction, subject to shareholder approval for both companies, is slated to close late in the third quarter or early in the fourth quarter of 2016. Nexstar said it intends to divest certain television stations necessary to obtain FCC approval of the proposed transaction.

Nexstar is an Irving, Texas-based diversified media company. Media General is a Richmond, Va.-based television broadcasting and digital media company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.