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Entercom Communications Corp. Message Board

  • belobuster belobuster Jul 15, 2011 11:54 AM Flag

    Current sell-off overdone?

    I know earnings are going to be softer and the near-term advertising outlook is not as strong as it was just a few months ago, but this should already be priced into the stock. Perhaps the latest concern is that the company's term loan matures in a year and management must be looking at a refi in this difficult bank market and or a high yield market that has also softened a bit. Factoring in the company's aggressive, mandated bank amortizations over the next 2 qtrs, and slightly more than $100mm in Ebitda, ETM's total leverage will stand at about 6x. Yesterday's news that JPM is being forced to re-cut the Cumulus $2B bank deal that will be utilized to finance the Citadel transaction is obviously weighing on all radio companies. The old CMLS deal talk was L+375 to L+400 for full $2B.... Now, new CMLS is seeking to break the deal into first and second lien tranches, with the 1st lien = L+425 to L+450 and a Libor floor of 125bp and expected pricing at 99. The 2nd lien tranche is talked at L+600 with a 150bp libor floor and priced at 98.5. The banking market still pushing back against the more levered broadcast companies and the general thought is that any financing costs will be higher than anticipated as facilities must be rolled. Assuming the higher pricing, if ETM were to do a similar deal it would cost the company an extra $10mm per year in interest expense (or $0.25/share in FCF). Still, even factoring in the higher interest expense, ETM should generate more than $80mm in FCF next year and the stock is trading at less than 4x FCF (or more than 25% FCF yield). Looks like compelling value.

14.05Jul 25 4:02 PMEDT