MCLEAN, Virginia – (COMMERCIAL THREAD) – Gannett Co., Inc. (“Gannett”, “we”, “our”, “our” or the “Company”) (NYSE: GCI) today announced that Gannett Holdings, LLC, a subsidiary of wholly owned by the Company, priced a $ 1.045 billion term loan (“Term Loan B”), which will be used to refinance the 11.5% term loan entered into for the acquisition by Gannett Media Corp. The B term loan at a price of L + 700, with a floor LIBOR of 0.75% and maturity February 2026, repayable at any time. The new B-term loan is expected to close early next week and is subject to execution of final documentation.
“We are pleased to announce the refinancing of our 11.5% term loan with a heavily syndicated B L + 700 term loan, which significantly improves the company’s balance sheet and overall capital structure,” said Michael Reed, President and CEO of Gannett. “The new B Term Loan will save us 375 basis points in annual interest, which is expected to translate into cash interest savings of approximately $ 90 million in 2021 before our expected asset sales. don’t reduce debt any further. Refinancing our original term loan has been our number one priority since closing the acquisition of Gannett Media Corp. in November 2019 and we are delighted that we were able to do so in early 2021, which is well ahead of our original target date. We will continue to make reducing our outstanding debt a top priority, with the goal of achieving senior net leverage below 1.0x over the next two years. Based on our strong preliminary fourth quarter results, we believe we are well positioned to organically grow our cash flow in 2021 and remain confident that we will be able to execute $ 100-125 million in asset sales. additional this year. ”
Term Loan B was arranged by Citigroup Global Markets Inc. and issued at a price of 98 with a maturity of 5 years, bringing the yield to maturity to 8.65%. The loan will be amortized quarterly at a rate of 10% per annum beginning September 30, 2021. The loan is subject to a financial sustenance clause, which requires a minimum qualifying cash flow of $ 30 million tested quarterly.
In addition, the Company plans to issue, concurrent with the closing of the new term loan, $ 84 million of the existing 6% senior secured convertible notes due 2027 in order to refinance an equivalent amount of notes that will be delivered to the Company in connection with the refinancing. Therefore, the outstanding amount of the existing 6% convertible notes is not expected to change. As a result of these transactions, the total debt outstanding will be $ 1.545 billion, which will include the $ 1.045 billion B term loan, $ 497.1 million of senior secured convertible notes at 6% and $ 3.3 million of former senior secured convertible notes of Gannett Media Corp. at 4.75%.
Gannett Co., Inc. (NYSE: GCI) is an innovative, digital-focused marketing and media solutions company committed to the communities in our network and helping them build relationships with their local businesses. With unparalleled reach nationally and locally, Gannett touches the lives of millions of people with our Pulitzer Prize-winning content, our experiences and benefits for consumers, and our products and services for advertisers. Its portfolio includes USA TODAY, local media organizations in 46 US states and Guam, and Newsquest, a wholly owned subsidiary with over 140 local media brands operating in the UK. Gannett also owns digital marketing services companies ReachLocal, Inc., UpCurve, Inc. and WordStream, Inc. and operates the largest media-owned events company in the United States, USA TODAY NETWORK Ventures, formerly GateHouse Live. To contact us, visit www.gannett.com.
Caution Regarding Forward-Looking Statements
Certain elements of this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the expected terms of the B term loan, the expected closing of the loan term B, potential interest rate savings, our leverage target for the next two years, our preliminary results for the fourth quarter of 2020, our ability to execute our operational and integration plans, our asset sales, our growth and cash flow expectations and the refinancing of our 6% convertible Notes. These statements are based on the current expectations and beliefs of management and are subject to a number of risks and uncertainties. These and other risks and uncertainties could cause actual results to differ materially from those described in forward-looking statements, many of which are beyond our control. The Company cannot guarantee that its expectations will be met. Therefore, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could cause actual results to differ from these forward-looking statements, see Risks and Other Factors detailed from time to time in the Company’s Annual Report on Form 10-K , quarterly reports on Form 10-Q, and other documents filed with the Securities and Exchange Commission. In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in the statements. prospective. These forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to publicly publish any update or revision to any forward-looking statement contained herein to reflect any change in the Company’s expectations in this regard or any change in the events, conditions or circumstances on which a statement is based.