Cost of Financing Media General Transaction
is Below Company’s Prior Expectation Resulting in Approximately $60
Million Annual Reduction in Post-closing Interest Expense
Nexstar and Media General Complete All
Required Conditions Necessary to Move Forward with the Proposed
Transaction and File Supplement to Waiver Seeking FCC
Approval
Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) (the “Company” or
“Nexstar”) announced today that its wholly-owned subsidiary,
Nexstar Broadcasting, Inc., priced a $2.75 billion term loan B
facility. The term loan B facility will be issued at a price equal
to 99.75% of its face value and will bear interest at a rate of
LIBOR plus 3.00%, with a 0.0% LIBOR floor and will have a seven
year maturity. The closing of the term loan B facility is subject
to customary closing conditions and the closing of the Media
General, Inc. (“Media General”) acquisition.
On January 27, 2016, Nexstar and Media General entered into a
definitive merger agreement whereby Nexstar will acquire all
outstanding shares of Media General for $10.55 per share in cash,
0.1249 of a share of Nexstar Class A common stock for each Media
General share and 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 Communications Commission’s
(“FCC”) incentive auction. Nexstar intends to use, among others,
the net proceeds from the term loan B facility, along with the
previously issued $900 million in aggregate principal amount of
5.625% new senior notes due 2024, cash proceeds from the
divestiture of certain assets and the issuance of new common stock
(pursuant to the exchange ratio disclosed at the time of the
announcement of the merger agreement), to fund its proposed
acquisition of Media General, to repay existing Nexstar credit
facilities, to repay, or make a change of control offer for,
existing Media General indebtedness and to pay other fees and
expenses related to Nexstar’s acquisition of Media General and the
related refinancing.
The pricing of the $2.75 billion term loan B facility combined
with the previously issued $900 million senior notes marks the
successful completion of the primary financing components needed to
complete the acquisition of Media General and the cost of financing
was below the Company’s estimates communicated in January 2016. As
a result, interest expense for the combined entity is expected to
be approximately $60 million lower annually than the assumptions
used in formulating the Company's pro forma guidance for 2016/2017,
which on a tax adjusted basis is expected to result in
approximately $40 million of additional pro forma annual free cash
flow. Reflecting the reduction in anticipated tax-adjusted annual
interest expense and identified year one synergies of $76 million,
Nexstar now expects to generate over $540 million of average annual
free cash flow over the 2016/2017 period. Pro forma for the
completion of the acquisition, the combined entity, to be re-named
Nexstar Media Group, is expected to have approximately 47 million
shares outstanding.
Other than FCC approval and certain other customary closing
matters, Nexstar and Media General have completed all of the steps
and satisfied all of the conditions under the merger agreement
necessary to move forward with the proposed transaction including
securing Department of Justice and Hart-Scott-Rodino approval,
entering agreements to divest stations necessary to reach ownership
and other regulatory compliance approvals (with the result being an
expansion of station ownership in the US by minority operators upon
closing), securing approvals from their respective shareholders and
obtaining substantially all of the financing needed to complete the
transaction. On Wednesday, September 21, 2016, the Company filed a
supplement to its waiver request with the FCC requesting prompt
approval of its acquisition of Media General, so that upon closing
of the acquisition, Nexstar may continue its initiatives across the
combined entity, providing superior, unique local content and
services to viewers and businesses in each of the communities it
serves.
The Company’s updated free cash flow expectations assume no net
proceeds from the incentive auction or additional synergies and
exclude the benefit of higher-than-anticipated proceeds from the
required station divestitures announced in the second quarter of
2016. As previously stated, the Company intends to initially
allocate free cash flow to leverage reduction.
Definitions and Disclosures Regarding non-GAAP Financial
Information
Free cash flow is calculated as income from operations plus
depreciation, amortization of intangible assets and broadcast
rights (excluding barter), (gain) loss on asset disposal, non-cash
compensation expense, non-cash representation contract termination
fee and loss on change in the fair value of contingent
consideration, less payments for broadcast rights, cash interest
expense, capital expenditures and net operating cash income
taxes.
Free cash flow is a non-GAAP financial measure. Nexstar believes
the presentation of this non-GAAP measures is useful to investors
because it is used by lenders to measure the Company’s ability to
service debt; by industry analysts to determine the market value of
stations and their operating performance; by management to identify
the cash available to service debt, make strategic acquisitions and
investments, maintain capital assets and fund ongoing operations
and working capital needs; and, because it reflect the most
up-to-date operating results of the stations inclusive of TBAs or
LMAs. Management believes it also provides an additional basis from
which investors can establish forecasts and valuations for the
Company’s business.
About Nexstar Broadcasting Group, Inc.
Nexstar Broadcasting Group is a leading diversified media
company that leverages localism to bring new services and value to
consumers and advertisers through its traditional media, digital
and mobile media platforms. Nexstar owns, operates, programs or
provides sales and other services to 104 television stations and
200 related digital multicast signals reaching 62 markets or
approximately 18.1% of all U.S. television households. Nexstar’s
portfolio includes primary affiliates of NBC, CBS, ABC, FOX,
MyNetworkTV and The CW. Nexstar’s community portal websites offer
additional hyper-local content and verticals for consumers and
advertisers, allowing audiences to choose where, when and how they
access content while creating new revenue opportunities.
Pro-forma for the completion of all announced transactions,
Nexstar will own, operate, program or provide sales and other
services to 171 television stations and their related low power and
digital multicast signals reaching 100 markets or nearly 39% of all
U.S. television households. For more information please visit
www.nexstar.tv.
Forward-Looking Statements
This communication includes forward-looking statements. We have
based these forward-looking statements on our current expectations
and projections about future events. Forward-looking statements
include information preceded by, followed by, or that includes the
words "guidance," "believes," "expects," "anticipates," "could," or
similar expressions. For these statements, Nexstar and Media
General claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995. The forward-looking statements contained in this
communication, concerning, among other things, the ultimate outcome
and benefits of a transaction between Nexstar and Media General and
timing thereof, and future financial performance, including changes
in net revenue, cash flow and operating expenses, involve risks and
uncertainties, and are subject to change based on various important
factors, including the timing to consummate the proposed
transaction; the risk that a condition to closing of the proposed
transaction may not be satisfied and the transaction may not close;
the risk that a regulatory approval that may be required for the
proposed transaction is delayed, is not obtained or is obtained
subject to conditions that are not anticipated, the impact of
changes in national and regional economies, the ability to service
and refinance our outstanding debt, successful integration of Media
General (including achievement of synergies and cost reductions),
pricing fluctuations in local and national advertising, future
regulatory actions and conditions in the television stations'
operating areas, competition from others in the broadcast
television markets, volatility in programming costs, the effects of
governmental regulation of broadcasting, industry consolidation,
technological developments and major world news events. Nexstar and
Media General undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this
communication might not occur. You should not place undue reliance
on these forward-looking statements, which speak only as of the
date of this release. For more details on factors that could affect
these expectations, please see the definitive joint proxy
statement/prospectus of Nexstar and Media General and Media
General’s and Nexstar’s other filings with the SEC.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160927006723/en/
Nexstar Broadcasting Group, Inc.Thomas CarterChief Financial
Officer972-373-8800orJCIRJoseph Jaffoni, Jennifer
Neuman212-835-8500nxst@jcir.com
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