Now that Toronto Dominion Bank has wrapped up a $1.75 billion financing for Evergreen Media's purchase of Chancellor Broadcasting, Chancellor has some refinancing of its own to do.
Over the next few weeks, Chancellor is expected to increase a $375 million credit facility to $725 million, bankers close to the deal said. The fattened credit will help Chancellor finance a $480 million purchase of several radio stations from Viacom.
If Evergreen's experience is any indication, Chancellor's bankers should have no trouble syndicating a new loan. Bankers have been eager to ride the wave of rapid consolidation that has swept the radio business, which is believed to be one of the few areas of media communications on a positive tear.
Bankers Trust acted as administration agent, NationsBank Corp. as syndication agent, and Goldman, Sachs & Co. as documentation agent for Chancellor's existing $375 million loan.
Dallas-based Chancellor and Irving, Tex.-based Evergreen announced a merger agreement in January. The deal, which is set to close in the third quarter, will create the largest pure play radio company in the United States, with 99 stations, nationwide.
The combination hinges on the $1.075 billion purchase of stations from Viacom, which must occur by mid-June. Evergreen is planning to buy $595 million of stations from Viacom, according to bankers close to the deal, with Chancellor buying the rest.
Meanwhile, bankers were eager to get in on the Toronto-Dominion-lead loan to Evergreen. The credit, which closed last Friday, drew $2.5 billion in commitments from 46 banks, exceeding the $1.5 billion sought.
In fact, demand for a leading position in the credit-which was split into a $1.25 billion revolver and a $500 million term loan, for eight years-was so high that 15 of the top positions were tied up before the loan went out to the general markets, according to lenders familiar with the deal.
"If you're a serious media lender, it's really a credit that you want to be in," said Bill Hughes, a vice president at Bankers Trust Co. in charge of loan syndications for the media and energy industries. The bank is a managing agent on the Evergreen loan.
Merrill Lynch Prime Rate Fund, Eaton Vance, and Van Kampen American Capital also invested in the deal.
'This is the successful syndication of one of the largest deals for a radio-only company," said Kevin Lockhart, a manager in loan syndications at Toronto Dominion Bank. "Toronto Dominion is excited to be the lead, and with all of the changes at the company, and to see continuing support for the bank group."
The Canadian bank led an earlier facility for Evergreen, a $625 million loan originated in November 1995. In January of this year, the bank replaced it with a $1 billion credit facility. Though it was fully syndicated, it never closed because Evergreen's deal for Chancellor was announced shortly thereafter, and the loan was retooled to $1.5 billion.
After the $1.5 billion loan was launched, Evergreen announced a $340 million acquisition of five radio stations from Gannett Broadcasting. The credit, which had been well-received by the market, was then increased to its current $1.75 billion.
Once Evergreen is combined with Chancellor, the two companies' bank groups will be combined, said Jacques Kerrest, chief financial officer of Chancellor Broadcasting. Many banks lend to both companies; the combination will create some new relationships.
Also to be decided is who will lead a $200 million high-yield bond issue for Evergreen in conjunction with the bank loan. Many lead lenders to Evergreen and Chancellor have junk bond origination capabilities.
