Journal Register anticipates $1.05 billion in bank financing via JPMorgan

By Sara Rosenberg

New York, July 6 - Journal Register Co. expects to get a new about $1.05 billion senior credit facility containing both pro rata and term loan B tranches to fund its acquisition of 21st Century Newspapers Inc. and to refinance existing debt, company officials said in a conference call Tuesday. JPMorgan is the lead bank on the deal.

A bank meeting to launch the credit facility is not expected to take place for a month or so, a source close to the deal told Prospect News. The source said details are not available yet because specifics are still being hashed out.

"We have the commitment from JPMorgan," company officials said in the call. "We're confident that we are going to have a very successful syndication. We've worked with JPMorgan going back to 1989."

The company currently estimates pricing at about Libor plus 150 basis points on the pro rata bank debt and slightly higher pricing on the term loan B tranche.

"It's not priced. We'll go out and get a better sense of that when we fully syndicate," officials said. "Our pricing will be on a grid, so if leverage comes down we will realize the benefit of lower spreads over Libor.

"Leverage is going to be in the 5¼ to 5½ times range at close based on the expected close date. And we do expect this to be meaningfully accretive on a free cash flow basis and therefore that leverage should come down quite quickly."

Under the acquisition agreement, Journal Register will pay $415 million in cash to acquire 21st Century Newspapers from affiliates of Kelso & Co., Goldman Sachs Capital Partners and Frank Shepherd, chairman and chief executive officer of 21st Century Newspapers. The transaction, which is expected to close in the third quarter, is subject to applicable governmental approvals.

Bear, Stearns & Co. Inc. advised Journal Register on the acquisition. Goldman, Sachs & Co., Dirks, Van Essen & Murray, and JP Morgan advised 21st Century Newspapers.

Journal Register is a Trenton, N.J., newspaper publishing company.

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