Gray Announces Private Offering of Senior Secured Notes

Rhea-AI Summary

Gray Television (NYSE: GTN) revealed its intention to offer up to $1 billion in senior secured first lien notes due 2029, contingent on market conditions. This offering will bypass the registration requirements of the Securities Act of 1933. Concurrently, Gray plans to secure a $750 million tranche F term loan maturing in 2029, increase its existing $625 million revolving credit facility by $55 million to $680 million, and terminate commitments under a $72.5 million revolving credit facility maturing in 2026.

The success of this offering is tied to the Credit Agreement Refinancing. Proceeds from the notes, together with new term loans, availability under the revolving credit facility, and cash on hand, will be used to refinance Gray’s $1.2 billion tranche E term loan due 2026, repurchase outstanding 5.875% senior notes due 2026, and cover related fees and expenses. The notes will be guaranteed by Gray's existing and future restricted subsidiaries but will only be available to qualified institutional buyers and non-U.S. entities.

Positive

• Offering up to $1 billion in senior secured notes can provide significant capital.
• Securing a $750 million tranche F term loan maturing in 2029 extends debt maturity.
• Increasing the revolving credit facility to $680 million enhances liquidity.
• Refinancing $1.2 billion tranche E term loan due 2026 can improve financial stability.
• Repurchasing 5.875% senior notes due 2026 may reduce interest expenses.
• Notes guaranteed by existing and future restricted subsidiaries offer some security for investors.

Negative

• Successful offering and refinancing are contingent on favorable market conditions.
• Termination of $72.5 million revolving credit facility maturing in 2026 may impact liquidity.
• The notes will not be registered under the Securities Act, limiting their marketability.
• Dependence on institutional buyers and non-U.S. entities may restrict investment opportunities.
• Potential market and other conditions may delay or prevent the successful completion of the refinancing.

Insights

Financial Analyst

Gray Television's decision to offer up to $1 billion in senior secured first lien notes due 2029 is a strategic move to manage its debt portfolio effectively. This refinancing effort involves several key components, including a new tranche F term loan of up to $750 million and an increase in their revolving credit facility by $55 million. The primary goal is to refinance existing debt, specifically the $1.2 billion tranche E term loan due 2026 and to repurchase outstanding 5.875% senior notes due 2026.

From a financial perspective, refinancing at this scale indicates a proactive approach to managing debt maturity profiles and potentially lowering interest expenses. However, the successful execution of this plan hinges on favorable market conditions and investor reception of the new notes. The increased debt maturity to 2029 offers Gray a longer horizon to manage its cash flows and investment strategies without immediate pressure from upcoming maturities.

It's also worth noting the shift in the revolving credit facility and the termination of an older tranche, which reflects Gray's efforts to streamline its credit agreements. Retail investors should watch for the interest rates on the new notes compared to the existing ones, as any significant difference could impact Gray's financial health in the long term. Additionally, understanding the implications of the guarantee by Gray's restricted subsidiaries is crucial, as it provides a safety net for the new notes, potentially making them more attractive to institutional investors.

Overall, this move shows Gray's commitment to robust financial management, though market conditions and execution risks remain critical factors to monitor.

Rating: 1

ATLANTA, May 20, 2024 (GLOBE NEWSWIRE) -- Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN) announced today that it intends to offer up to $1 billion aggregate principal amount of senior secured first lien notes due 2029, subject to market conditions. The offering will be exempt from the registration requirements of the Securities Act of 1933 (the “Securities Act”).

In connection with the offering of notes, Gray expects to (i) incur up to $750 million of a new tranche F term loan with a maturity date in 2029, (ii) increase the aggregate commitments under its existing $625 million revolving credit facility by $55 million, resulting in aggregate commitments under the revolving credit facility of $680 million and (iii) terminate commitments under a $72.5 million tranche of the revolving credit facility maturing in 2026 (collectively, the “Credit Agreement Refinancing”). The closing of this offering of notes is conditioned on the closing of the Credit Agreement Refinancing, and the closing of the Credit Agreement Refinancing is conditioned on the closing of this offering. The completion of the Credit Agreement Refinancing is subject to market and other conditions and there can be no assurance as to whether or when the Credit Agreement Refinancing may be completed, if at all.

The notes are being offered, together with the net proceeds of the new tranche F term loans, availability under its revolving credit facility and cash on hand, to refinance Gray’s $1.2 billion tranche E term loan due 2026, repurchase in a tender offer any and all of its outstanding 5.875% senior notes due 2026 and pay all fees and expenses in connection with the offering.

The notes will be guaranteed, jointly and severally, by each existing and future restricted subsidiary of Gray that guarantees Gray’s existing senior credit facility.

The notes and related guarantees will be offered only to qualified institutional buyers under Rule 144A of the Securities Act, and to non-U.S. persons in transactions outside the United States under Regulation S of the Securities Act. The notes have not been, and will not be, registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This notice is being issued pursuant to and in accordance with Rule 135c under the Act.

Forward-Looking Statements:

This press release contains certain forward-looking statements that are based largely on Gray’s current expectations and reflect various estimates and assumptions by Gray. These statements are statements other than those of historical fact and may be identified by words such as “estimates,” “expect,” “anticipate,” “will,” “implied,” “intend,” “assume” and similar expressions. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond Gray’s control, include Gray’s ability to consummate the offering of notes, the Credit Agreement Refinancing or the tender offer, the intended use of proceeds of the offering and the Credit Agreement Refinancing, and other future events. Gray is subject to additional risks and uncertainties described in Gray’s quarterly and annual reports filed with the Securities and Exchange Commission from time to time, including in the “Risk Factors,” and management’s discussion and analysis of financial condition and results of operations sections contained therein, which reports are made publicly available via its website, www.gray.tv. Any forward-looking statements in this communication should be evaluated in light of these important risk factors. This press release reflects management’s views as of the date hereof. Except to the extent required by applicable law, Gray undertakes no obligation to update or revise any information contained in this communication beyond the date hereof, whether as a result of new information, future events or otherwise.

Gray Contacts:

Jim Ryan, Executive Vice President and Chief Financial Officer, 404-504-9828
Jeff Gignac, Executive Vice President, Finance, 404-504-9828
Kevin P. Latek, Executive Vice President, Chief Legal and Development Officer, 404-266-8333

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FAQ

What is Gray Television's (GTN) new debt offering?

Gray Television plans to offer up to $1 billion in senior secured first lien notes due 2029.

How will Gray Television (GTN) use the proceeds from the new notes?

Proceeds will be used to refinance existing debt, repurchase outstanding senior notes due 2026, and cover related fees and expenses.

What are the terms of Gray Television's (GTN) new tranche F term loan?

Gray Television intends to incur up to $750 million of a new tranche F term loan maturing in 2029.

What changes are being made to Gray Television's (GTN) revolving credit facility?

Gray Television is increasing the revolving credit facility by $55 million, bringing the total to $680 million.

What are the conditions for the success of Gray Television's (GTN) new note offering and refinancing?

The success of the offering and refinancing is dependent on favorable market and other conditions.