SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 19, 1996
KATZ MEDIA GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13674 13-3779269
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(State of Incorporation)(Commission File Number) (IRS Employer
Identification No.)
125 West 55th Street, New York, New York 10019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 424-6000
5. Other Events
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On December 19, 1996, Katz Media Group, Inc. ("KMG"), through its
wholly-owned subsidiary, Katz Media Corporation (the "Company"), completed the
refinancing of its existing indebtedness (the "Refinancing"). In connection with
the Refinancing, the Company (i) accepted for payment $97.7 million principal
amount of its 12 3/4% Senior Subordinated Notes due 2002 (the "Katz Notes"),
(ii) consummated a private offering under Rule 144A of the Securities Act of
1933, as amended (the "Securities Act"), of $100,000,000 aggregate principal
amount of its 10 1/2% Senior Subordinated Notes due 2007 (the "Notes") and (iii)
refinanced its existing credit facility with a new revolving credit and term
loan facility providing for loans of up to $180.0 million.
The Notes were issued pursuant to an indenture, dated as of
December 19, 1996 (the "Indenture"), by and among the Company, American Stock
Transfer & Trust Company, as trustee, and Katz Communications, Inc., Katz
Millennium Marketing Inc., Banner Radio Sales, Inc., Christal Radio Sales, Inc.,
Eastman Radio Sales, Inc., Seltel Inc., Katz Cable Corporation and The National
Payroll Company, Inc., as initial guarantors, a copy of which is attached
hereto. The Notes mature on January 15, 2007. Interest on the Notes will accrue
at the rate of 10 1/2% per annum and is payable semi-annually in cash on January
15 and July 15, commencing on July 15, 1997.
The Notes may be redeemed at the option of the Company, in whole
or in part, on or after January 15, 2002, at the redemption prices set forth in
the Indenture, plus accrued and unpaid interest and Liquidated Damages (as
defined in the Indenture), if any, to the date of redemption. In addition, on or
prior to January 15, 2000, the Company may redeem up to 35% in aggregate
principal amount of the Notes at a redemption price of 109.5% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the redemption date, with the net proceeds of an offering of equity
securities of the Company or its parent; provided that at least 65% in aggregate
principal amount of Notes originally issued remains outstanding immediately
after the occurrence of each such redemption.
The Notes are general unsecured obligations of the Company,
subordinate in right of payment to all existing and future Senior Debt (as
defined in the Indenture) of the Company, including indebtedness under the New
Credit Agreement, and senior in right of payment to the Katz Notes and any other
future subordinated indebtedness of the Company. As a result of the Refinancing,
the Company has available an aggregate of approximately $63.3 million under the
New Credit Agreement for working capital purposes, including the purchase of
representation contracts, potential acquisitions and other general corporate
purposes, and the possible repurchase by KMG of its common stock from time to
time in the open market. Of the aggregate available amount, approximately $44.4
million is immediately available and the remainder will become available in the
future, subject to the achievement of certain financial ratios and compliance
with certain other conditions.
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The Notes are guaranteed (the "Subsidiary Guarantees") on an
unsecured, senior subordinated basis by substantially all of the Company's
existing and future subsidiaries (collectively, the "Guarantors"). The
Subsidiary Guarantees are senior in right of payment to the obligations of the
Guarantors in respect of the Katz Notes, but are subordinated in right of
payment to all existing and future Senior Debt of the Guarantors, including the
guarantees by the Guarantors of the New Credit Agreement.
Upon a Change of Control (as defined in the Indenture), the
holders of Notes will have the right to require the Company to purchase their
Notes, in whole or in part, at a price equal to 101% of the aggregate principal
amount thereof.
The Indenture contains certain covenants with respect to the
Company and its Restricted Subsidiaries (as defined in the Indenture) that limit
the ability of the Company and its Restricted Subsidiaries to, among other
things, (i) incur additional indebtedness and issue preferred stock; (ii) pay
dividends or make other distributions or make certain other restricted payments;
(iii) layer indebtedness; (iv) create certain liens; (v) sell assets; (vi) enter
into certain transactions with affiliates; (vii) enter into certain mergers or
consolidations; or (viii) sell or issue capital stock of the Company's
subsidiaries.
The Company has agreed to file with the Securities and Exchange
Commission, within 45 days after the date of issuance of the Notes, a
registration statement under the Securities Act relating to an exchange offer
for the Notes, and will use its reasonable best efforts to cause such
registration statement to become effective within 120 days after the Issue Date.
In addition, under certain circumstances, the Company may be required to file a
shelf registration statement under which the holders of Notes will be entitled
to offer and sell the Notes from time to time without restrictions or
limitations under the Securities Act.
Net proceeds from the sale of the Notes of approximately $97.2
million, together with borrowings under the New Credit Agreement, will be
applied primarily to the repurchase of the Katz Notes in the tender offer
(approximately $109.9 million), the repayment of all outstanding obligations
under the old credit facility (approximately $96.0 million) and the repayment of
all outstanding obligations under the interim facility of KMG (approximately
$5.6 million).
In connection with the Refinancing, the Company has also entered
into the New Credit Agreement, a copy of which is attached hereto, pursuant to
which Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") acts as
arranger, an affiliate of DLJ as syndication agent and The First National Bank
of Boston as administrative agent. Under the New Credit Agreement, certain
lenders (the "Lenders") will provide the Company will a secured revolving credit
and term loan facility of up to $180.0 million, consisting of Tranche A term
loans of up to $60.0 million, Tranche B loans of up to $40.0 million and
revolving loans of up to $80.0 million. Tranche A term loans begin amortizing in
1999 and have a final maturity of September 30, 2003. Tranche B term loans begin
amortizing in 1999 and have a final maturity of December 31, 2004. Mandatory
prepayments of the term loans and reductions in the revolving commitments under
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the New Credit Agreement will be required to be made in the amount of $0.16
million in 1997, $0.16 million in 1998, $6.16 million in 1999, $14.16 million in
2000, $24.16 million in 2001, $38.16 million in 2002, $69.6 million in 2003 and
the remaining $32.0 million on the final maturity of the New Credit Agreement in
2004. In addition, in the event the Company's pro forma ratio of total debt to
EBITDA (as defined in the New Credit Agreement) exceeds a certain level, the
Company will be required to make certain mandatory reductions in borrowings or
commitments under the New Credit Agreement to the extent of 50% of the net
proceeds from any issuance of equity securities.
Interest is payable on borrowings under the New Credit Agreement
at rates based on either a "Base Rate" or a "Eurodollar Rate" (each as defined
in the New Credit Agreement), as selected by the Company plus a margin ranging
from 0% to 2 5/8%, depending on whether the selected rate is a "Base Rate" or a
"Eurodollar Rate," the Company's ratio of total debt to EBITDA on a trailing
four-quarter basis and whether such loans are Tranche A term loans, Tranche B
term loans or revolving credit loans.
The New Credit Agreement contains certain restrictive covenants
that impose limitations or prohibitions upon the Company, including covenants
with respect to: (i) the creation, incurrence or existence of any additional
indebtedness or contingent obligations; (ii) the creation, incurrence or
existence of liens; (iii) mergers, stock issuances and sales of assets; (iv) the
making of investments in other persons; (v) the payment of dividends, the
repurchase of capital stock and the prepayment or repurchase of subordinated
indebtedness; (vi) transactions with affiliates; (vii) the sale or disposition
of any ownership of any Restricted Subsidiary (as defined in the New Credit
Agreement); (viii) any change in the nature of the business; (ix) sale-
leaseback transactions; (x) any modification of any Related Document (as defined
in the New Credit Agreement) or of any material agreement; (xi) modifications to
the capital structure of the Company or its subsidiaries; (xii) capital
expenditures; (xiii) the formation or acquisition of new subsidiaries; and (xiv)
other covenants customarily found in loan agreements of this type. The New
Credit Agreement also requires the Company and its subsidiaries, among other
things (x) to maintain customary insurance and material licenses, permits and
intellectual property rights; (y) to comply with applicable laws and
regulations; and (z) to provide the Lenders annual audited and quarterly
unaudited financial statements and certain other reports and certificates.
The New Credit Agreement also provides that as long as any
commitments or loans remain outstanding thereunder, the Company shall maintain a
certain (i) fixed charge coverage ratio, (ii) total interest coverage ratio and
(iii) total debt to EBITDA ratio, as specified in the New Credit Agreement for
each fiscal quarter.
The New Credit Agreement is secured by (i) pledge agreements
executed by the Company and all of its domestic subsidiaries, pursuant to which
each of them has pledged all (or, in the case of foreign subsidiaries, 65%) of
the common stock and intercompany notes of their respective subsidiaries; (ii)
security agreements, pursuant to which the Company and all of its domestic
subsidiaries has granted security interests in substantially all of their
assets; and (iii) a pledge agreement executed by Katz Media Services, Inc.
("KMSI"), a wholly-owned subsidiary of KMG and direct parent of the Company,
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pursuant to which KMSI has pledged all of the common stock of the Company, in
each case for the ratable benefit of the Lenders and the agents under the New
Credit Agreement. In addition, KMSI and all of the domestic subsidiaries of the
Company guarantee payment of all borrowings under the New Credit Agreement. The
guarantees by such subsidiaries of obligations under the New Credit Agreement
will rank senior to the Subsidiary Guarantees.
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Item 7. Financial Statements and Exhibits
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(c) Exhibits
1. Indenture, dated as of December 19, 1996, by and among Katz Media
Corporation, American Stock Transfer & Trust Company, as trustee,
and Katz Communications, Inc., Katz Millennium Marketing Inc.,
Banner Radio Sales, Inc., Christal Radio Sales, Inc., Eastman
Radio Sales, Inc., Seltel Inc., Katz Cable Corporation and The
National Payroll Company, Inc., as guarantors.
2. U.S. $180,000,000 Credit Agreement, dated as of December 19,
1996, by and among Katz Media Corporation, as borrower, the
lenders party thereto, The First National Bank of Boston, as
Administrative Agent, and DLJ Capital Funding, Inc., as
Syndication Agent.
3. Press release dated December 19, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
KATZ MEDIA GROUP, INC.
By: /s/ Richard E. Vendig
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Richard E. Vendig
Senior Vice President
Chief Financial & Administrative Officer
Treasurer
Date: December 19, 1996
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EXHIBIT INDEX
Exhibit No. Description Page No.
1 Indenture, dated as of December 19, 1996, by and among Katz 10
Media Corporation, American Stock Transfer & Trust Company, as
trustee, and Katz Communications, Inc., Katz Millennium
Marketing Inc., Banner Radio Sales, Inc., Christal Radio
Sales, Inc., Eastman Radio Sales, Inc., Seltel Inc., Katz
Cable Corporation and The National Payroll Company, Inc., as
initial guarantors.
2 U.S. $180,000,000 Credit Agreement dated as of December 19, 109
1996 among Katz Media Corporation, as borrower, the lenders
party thereto, The First National Bank of Boston, as Admin-
istrative Agent, and DLJ Capital Funding, Inc., as Syndication
Agent.
3 Press release dated December 19, 1996. 212
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