Hearing preliminary price talk is out on the new 7 year $260mm term loan B deal. Probably going to close Friday or Monday. Looks like it's expected to come in the L+400 area with a Libor floor of 1.25% and issued at a discount to par. All in, brings expected financing cost to the 5.5% area. About 100bp cheaper than the existing subordinated bonds. Not bad. The fact that it looks like it will get done and going to eliminate any remaining refinancing concerns related to the 2013 bonds, appears to be helping stock price.
Interesting that TVL pretty strong BLC pretty weak--
Just a guess of course but money could be coming out of BLC into TVL primarily related to the TVL clarity on refinancing.
It seems that there is general agreement that without the Joint venture uncertainty as related to TVL risk (however remote) in event of default, that TVL would be trading significantly higher--
I do have a question-- The two stations in the joint venture---in your opinion is there some reasonable basis for establishing a worth approximately $250,000,000-$350,000,000 each? Do not know the broadcast industry very well---Just intutitively these numbers seems high?
Are they super stations or maybe some special circumstance that creates these values.
Regarding Belo, think stock has been weak because Fidelity has been a large seller recently. They filed a 13g yesterday that stated they held 5.6mm shares at YE 2010, 3.1mm at end of the 3rd quarter and 300k as of filing yesterday. Think that is good news for stock as this large seller is out of the way. Also, management expects to complete bank deal - potentially by year-end - and have to believe they will quickly follow TVL's deal in the market. Again, more potential good news for stock.
Tough to get a good value on the JV stations value based on fundamental analysis given the depressed operating performance of the last 4 years. Historically, the company generated operating cash flow as follows: 2006 = $93mm, 2007 = $77, 2008 = $64, 2009 = $31, 2010 = $57mm. As can be seen, not very attractive and this is the main reason for the overhang on TVL stock (as fear about the $815mm guarantee reverting back to them grew). Typically these very large market stations would attract a premium multiple - even in depressed markets - and at 10x projected average operating cash flow of say $50-$60mm gets you the $500-$600mm valuation.
By the way, all in cash operating costs (given large cash interest burden) for the JV are about $70mm and this is what gave rise to the deficits and reasons for NBC and Lin kicking cash in to support. Operating costs have been cut a bit and performance is slightly up this year so perhaps cash flow neutral in 2011. Now, the focus has moved to retrans - which they have none of. Over the next 5 years this is expected to grow roughly evenly to about $30mm, maybe more. And with no reverse comp, the full amount is expected to fall to the bottom line by 2017. So, if you assume the stations recover with economy and grow operating cash flow back to $80mm and give them credit for the retrans (maybe not the full $30mm 5 years out, but perhaps $15-$20mm in 3 years is fair), the JV could be generating $100mm in operating cash flow and throwing off free cash flow of about $30mm as well. At this level, the stations will probably be worth about $1B (again 10x multiple) and the JV equity will be about $200-$250mm.