Young Broadcasting obtains note holders' consents

By Paul A. Harris

St. Louis, Mo., Nov. 28 - Young Broadcasting, Inc. said it obtained approval for an amendment to its senior credit facility, as well as consents from the necessary number of holders of its 9% senior subordinated notes due 2006, clearing the way for the company to offer a new issue of up to $250 million of senior unsecured notes.

Young Broadcasting chief financial officer Jim Morgan told Prospect News Wednesday that the company is monitoring the high yield market carefully, as it makes its decisions about offering the new paper.

"We're just looking at interest rates, deciding when we want to do it," Morgan said.

"The high yield market is extraordinarily hot right now," he added. "There's a lot of money floating around. We're evaluating whether or not it makes any sense to go."

Asked if there was competition among investment banks to bring the Young Broadcasting deal to market, Morgan replied: "I think its fair to say that the investment banking community is extraordinarily busy right now. They are looking at all kinds of ideas."

While he allowed that the high yield primary market is currently "hot," Morgan also said that in an historical context the market is a relatively expensive one for issuers.

"It's quite a broad spread to Treasuries right now," he said. "And since we borrow our senior bank debt based on Libor, it's a big spread to Libor.

"You can never count on the market staying the same condition for an extended period of time," Morgan added. "You never know where it's going to be in 2002. But with Libor and Treasuries down as low as they are, right now, it gives us an opportunity to do some very attractive financing. And the nice thing about high yield is that it's a lock-in for a period of time.

"We have to balance that against our other alternatives for financing."

When Morgan spoke to Prospect News during the last week of October, the broadcasting sector was suffering from reductions in advertising revenues triggered by the slow economy, and by the terrorist attacks of Sept. 11.

In the intervening weeks, he said, the picture has not changed dramatically.

"Advertising tends to lead the country out of recession," he commented. "If you believe that we are in a recession and that we are going to come out of it sometime next year, then advertising should lead it out."

Young Broadcasting's consent solicitation was managed by Deutsche Banc Alex. Brown, CIBC World Markets and First Union Securities.

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