| Item 1.01 | Entry into a Material Definitive Agreement. |
On October 19, 2020, Gray Television, Inc. (“Gray”, “we” or the “Company”) issued $800 million in aggregate principal amount of its 4.750% Senior Notes due 2030 (the “Notes”) pursuant to an indenture, dated as of October 19, 2020, between Gray, the subsidiary guarantors signatory thereto (collectively, the “Guarantors”) and U.S. Bank National Association, as trustee (the “Indenture”). The Notes were issued at par. The Notes were offered and sold pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”).
The net proceeds of the Notes are being used (i) to redeem all of the Company’s outstanding $525 million aggregate principal amount of 5.125% senior notes due 2024 (the “existing 2024 notes”), (ii) to pay all fees and expenses in connection with the offering, including the redemption premium applicable to the existing 2024 notes, and (iii) for general corporate purposes, which could include the repayment of outstanding debt from time to time.
The terms of the Notes are governed by the Indenture. The Indenture contains covenants that limit the ability of the Company and any guarantors to, among other things, (i) incur additional indebtedness; (ii) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; (iii) enter into certain transactions with affiliates of the Company; (iv) enter into certain transactions that restrict distributions from restricted subsidiaries; (v) sell or otherwise dispose of assets; (vi) create or incur liens; merge, consolidate or sell all or substantially all of the Company’s assets; (vii) place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Company; and (viii) designate the Company’s subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications.
The Indenture contains customary events of default, including, among other things, (i) failure to make required payments; (ii) failure to comply with certain agreements or covenants; (iii) failure to pay certain other indebtedness; (iv) certain events of bankruptcy and insolvency; and (v) failure to pay certain judgments. An event of default under the Indenture will allow either the Trustee or the holders of at least 25% in aggregate principal amount of the then-outstanding series of notes, as applicable, issued under such Indenture to accelerate, or in certain cases, will automatically cause the acceleration of, the amounts due under the applicable series of notes.
The Notes mature on October 15, 2030. Interest accrues on the Notes from October 19, 2020, and is payable semiannually, on April 15 and October 15 of each year, beginning on April 15, 2021. We may redeem some or all of the Notes at any time after October 15, 2025 at redemption prices specified in the Indenture. We may also redeem up to 40% of the aggregate principal amount of the Notes at 104.750% before October 15, 2023 using the net cash proceeds from certain equity offerings. In addition, we may redeem some or all of the Notes at any time prior to October 15, 2025 at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus a make whole premium set forth in the Indenture. If we sell certain of our assets or experience specific kinds of changes of control, we must offer to repurchase the Notes.
A copy of the Indenture is attached to this Current Report on Form 8-K (this “Report”) as Exhibit 4.1 and is incorporated by reference herein. The Form of Notes, attached to the Indenture as Exhibit A, is attached to this Report as Exhibit 4.2 and is incorporated by reference herein. The foregoing description of the Notes and the Indenture is qualified in its entirety by reference to the complete text of the Indenture.
The Notes and related guarantees are Gray’s and the Guarantors’ senior unsecured obligations.
