Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- S&P Global Ratings has raised the issue-level rating on Gray Media Inc.’s senior secured first-lien debt to ’B+’ from ’B’ and revised the recovery rating to ’1’ from ’2’ on Thursday.
The improved recovery rating indicates S&P’s expectation for very high (90%-100%; rounded estimate:90%) recovery for lenders in the event of a payment default, up from the previous estimate of about 85%.
The rating action follows Gray Media’s decision to upsize its recently proposed senior secured second-lien notes by $150 million to $900 million. The company plans to use the additional proceeds to further reduce its senior secured first-lien term loan F, which enhances recovery prospects for first-lien debtholders.
S&P maintained the ’ CCC (WA:CCCP)’ issue-level rating and ’6’ recovery rating on Gray’s senior secured second-lien debt and senior unsecured debt. The ’B-’ issuer credit rating and stable outlook also remain unchanged.
The stable outlook reflects S&P’s view that Gray Media will maintain net leverage in the high-6x area in 2025, while generating positive free operating cash flow and EBITDA interest coverage above 1.5x for the next 12 months.
After the transactions, Gray Media’s debt structure will include a $750 million senior secured first-lien revolving credit facility maturing in 2028 (with approximately $50 million drawn), $1.4 billion senior secured first-lien term loan D maturing in 2028, approximately $90 million senior secured first-lien term loan F due in 2029, $1.25 billion senior secured first-lien notes due in 2029, and $900 million of senior secured second-lien notes due in 2032.
The company also has various tranches of senior unsecured notes totaling approximately $1.99 billion with maturities ranging from 2026 to 2031, and a $400 million accounts receivable securitization facility due in 2028.
S&P’s recovery analysis includes a simulated default scenario in 2027, which considers potential advertising revenue declines due to economic weakness, increased competition from alternative media, declines in retransmission revenue, and pressure from affiliated networks.
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