| Subsequent Events | (9) Subsequent Events
Greater Media Merger
On November 1, 2016 (the “Closing Date”), the
Company completed the acquisition of Greater Media, Inc.
(“Greater Media”), pursuant to that certain merger
agreement, dated as of July 19, 2016 by and among the Company,
Greater Media, Beasley Media Group 2, Inc., an indirect
wholly-owned subsidiary of the Company (“Merger Sub”),
and Peter A. Bordes, Jr., as the Sotckholders’ Representative
(the “Merger Agreement”). On the Closing Date, Merger
Sub was merged with and into Greater Media, with Greater Media
surviving the merger as an indirect wholly-owned subsidiary of the
Company (the “Merger”). As a result of the Merger, the
Company will add 21 radio stations in the Boston, MA, Detroit, MI,
Charlotte, NC, Middlesex, NJ, Monmouth, NJ, Morristown, NJ and
Philadelphia, PA markets. However, in order to comply with the
FCC’s rules, the Charlotte radio stations, WBT-AM, WBT-FM,
and WLNK-FM are currently operating in a trust, pending completion
of the sale to Entercom Communications Corp. (see “Radio
Station Sales” below). The Merger substantially broadened and
diversified the Company’s local radio broadcasting platform
and revenue base with new stations that are geographically
complementary to the Company’s ongoing operations.
Pursuant to the terms of the Merger Agreement, at the effective
time of the Merger, the Company acquired all of the issued and
outstanding common stock of Greater Media for an aggregate purchase
price of $239,875,000, subject to a purchase price adjustment
related to the sale of Greater Media’s tower assets and other
customary post-closing purchase price adjustments and inclusive of
the repayment of approximately $82.0 million of Greater
Media’s outstanding debt and the payment of certain
transaction expenses. The proceeds paid to the stockholders of
Greater Media consisted of (i) approximately $94.4 million in
cash and (ii) $25.0 million in shares of the Company’s
Class A common stock, which is equal to 5,422,993 shares at a
fixed value of $4.61 per share (the “Merger Shares”).
The Merger consideration is subject to adjustment for changes in
working capital of Greater Media, outstanding debt of Greater Media
and its subsidiaries as of the date of the closing and certain
other payments and expenses. Additional Merger Shares may be issued
in connection with such adjustment. In addition, the stockholders
of Greater Media will receive the net cash proceeds from the sale
of Greater Media’s tower assets, estimated to be
approximately $24.0 million. Merger expenses of $1.2 million were
expensed as a separate line item in the statements of comprehensive
income for the three and nine months ended September 30,
2016.
As of the date the Company issued these financial statements, the
Company had not received the necessary financial information from
Greater Media to determine the fair value of assets acquired and
liabilities assumed to complete the purchase price allocation,
pro-forma information and other required business combination
disclosures. The Company expects to finalize its valuations and
complete the purchase price allocation as soon as practicable but
no later than one year from the acquisition date
New Credit Agreement
On November 1, 2016, Beasley Mezzanine Holdings, LLC (the
“Borrower”), a wholly-owned subsidiary of the Company
entered into a new credit agreement by and among the Borrower,
Royal Bank of Canada, as administrative agent and collateral agent
and U.S. Bank National Association, as syndication agent (the
“New Credit Agreement”), providing for a term loan B
facility in the amount of $265.0 million (the “Term Loan
Facility”) and a revolving credit facility of $20.0 million
(the “Revolving Credit Facility”, and together with the
Term Loan Facility, the “New Credit Facility”).
Proceeds from the Term Loan Facility were used to repay the
Existing Credit Facility, pay a portion of the purchase price and
fees, costs and expenses incurred in connection with the Merger and
to repay existing third party indebtedness of Greater Media. In
connection with the New Credit Facility, the Company expects to
record a loss on modification of long-term debt of $0.6 million
during the fourth quarter of 2016.
The New Credit Facility is secured by substantially all assets of
the Company, the Borrower and their subsidiaries, including Greater
Media and its subsidiaries acquired through the Merger. The Company
and the Borrower’s subsidiaries guarantee repayment of the
New Credit Facility.
The Term Loan Facility matures on the seventh anniversary of the
Closing Date, which was November 1, 2016, and will amortize in
quarterly installments in aggregate annual amounts equal to
(i) 2.5% of the original principal amount of the Term Loan
Facility during the first two years after the Closing Date and
(ii) 5.0 % of the original principal amount of the Term
Loan Facility for each year thereafter. The first amortization
payment is due at the end of the first full fiscal quarter after
the Closing Date and the remaining balance of the original
principal amount of the Term Loan Facility outstanding at maturity
will be paid in a final balloon payment. The Revolving Credit
Facility terminates on the fifth anniversary of the Closing Date
and loans thereunder may be borrowed, repaid, and reborrowed up to
such date.
Loans under the New Credit Facility, at the Borrower’s
option, will bear interest at either LIBOR plus 6.0% or base rate
plus 5.0%. Each interest rate decreases 0.25% when the
Company’s first lien leverage ratio is equal to or less than
3.75 times. Solely with respect to the Term Loan Facility incurred
on the Closing Date, LIBOR is subject to a 1% floor. Interest
payments for the loans based on LIBOR are due at the end of each
applicable interest period unless the interest period is longer
than three months, then they are due at the end of each three month
period. Interest payments for the loans based on the base rate are
due quarterly.
The New Credit Facility is subject to customary negative covenants
as well as a financial covenant that is a maximum first lien
leverage ratio that will be tested as the end of each fiscal
quarter beginning with the quarter ending March 31, 2017. The
Company’s Consolidated First Lien Debt, as described in the
New Credit Agreement, on the last day of each fiscal quarter for
the period from March 31, 2017 through March 31, 2018
must not exceed 6.25 times its Consolidated EBITDA, as described in
the New Credit Agreement, for the four quarters then ended. For the
period from June 30, 2018 through September 30, 2018, the
maximum ratio is 6.0 times. For the period from December 31,
2018 through September 30, 2019, the maximum ratio is 5.75
times. For December 31, 2019 and thereafter, the maximum ratio
is 5.25 times.
The aggregate scheduled principal repayments of the New Credit
Facility for the next five years and thereafter are as follows:
2017 $ 6,625,000
2018 6,625,000
2019 13,250,000
2020 13,250,000
2021 13,250,000
Thereafter 212,000,000
Total $ 265,000,000
Radio Station Sales
On October 18, 2016, the Company entered into a definitive
agreement to sell substantially all of the assets used or useful in
the operations of WBT-AM, WBT-FM, WFNZ-AM and WLNK-FM in Charlotte,
NC to Entercom Communications Corp. (“Entercom”) for
$24.0 million. On November 1, 2016, Entercom began operating
WBT-AM, WBT-FM and WLNK-FM, which are currently in a trust
following completion of the Company’s acquisition of Greater
Media, under a local marketing agreement. The sale, which is
expected to close in the fourth quarter of 2016, is subject to
Federal Communications Commission approval and other customary
closing conditions. The Company intends to use the net proceeds to
repay a portion of the outstanding balance under the
Company’s New Credit Facility. The assets of WFNZ-AM have
been classified as held for sale as of September 30, 2016.
A summary of assets held for sale as of December 31, 2015 and
September 30, 2016 is as follows:
December 31, September 30,
Property and equipment, net $ 1,755,123 $ 1,715,917
FCC broadcasting license 2,166,400 2,166,400
$ 3,921,523 $ 3,882,317 |
