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18 May 2007
Moody's Assigns Ba2 Rating to Tribune's Tranche "X" Term Loan
Approximately $7 Billion of Debt Affected
New York, May 18, 2007 -- Moody's Investors Service assigned a Ba2 rating to Tribune Company's ("Tribune")
proposed $1.5 billion senior secured tranche X term loan
due in 2009 ("bridge loan"). The amount of the bridge loan was
reallocated from the proposed $7.015 billion term loan B,
which is now reduced to $5.515 billion. Tribune plans
to utilize the proceeds to refinance its existing $2.8 billion
of credit facilities and fund the approximate $4.2 billion
first step tender offer for Tribune common stock as part of the company's
privatization plan.
The bridge loan and term loan have the same senior unsecured guarantee
from material operating subsidiaries, and an identical collateral
pledge consisting of the stock of certain subsidiaries. Accordingly,
Moody's believes the priority of the bridge loan and term loan B is the
same and has assigned a Ba2 rating and LGD3-37 assessment to both
instruments. However, the bridge loan has required amortization
of $750 million in 18 months (versus 1% annual amortization
on the term loan B) and is entitled to all mandatory prepayments,
including from asset sales, until the bridge loan is repaid.
Moody's believes the increase in required debt service due to the bridge
loan's $750 million amortization and two year maturity raises refinancing
risk.
All ratings, including Tribune's Ba3 Corporate Family Rating (CFR)
remain on review for downgrade. Moody's will likely downgrade the
CFR to B2 with a stable rating outlook if (1) the second step of the privatization
plan is completed in accordance with the transaction structure outlined
in Tribune's April 1, 2007 Form 8-K and; (2) industry
conditions, the company's cash flow generation and anticipated asset
sale proceeds are in line with Moody's expectations. A downgrade
of the CFR to B2 would likely result in the ratings for the proposed bank
credit facilities, including the $1.5 billion tranche
X term loan and $5.515 billion term loan B, moving
to B1 from Ba2 based on the capital mix outlined in Tribune's April 1,
2007 Form 8-K (prior to the effect on the debt mix from proposed
asset sales). Please see Moody's April 23, 2007 press
release and the credit opinion posted on www.moodys.com
for additional information.
Assignments:
..Issuer: Tribune Company
....Senior Secured Bank Credit Facility,
Assigned Ba2 (LGD3-37)
Tribune Company, headquartered in Chicago, Illinois,
is a leading media company with operations in television and radio broadcasting,
publishing, education and interactive services.
New York
Mark Gray
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
John E. Puchalla
Asst Vice President - Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
No Related Data.
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