Gannett Co., Inc. ("Gannett", "we", "us", "our", or the
“Company") (NYSE: GCI) today announced that it has refinanced
approximately $500 million of its 11.5% term loan, maturing in
2024, with 6.0% convertible notes due in 2027. The refinancing
reduces the outstanding term loan to $1.118 billion.
“We are pleased to announce the refinancing, which we believe
has three key benefits,” said Michael Reed, Gannett Chairman and
Chief Executive Officer. “First, it generates significant savings,
reducing our annual interest expense by approximately $28 million
per year. These savings will be used to accelerate repayment of our
term loan. Second, we believe that this refinancing paves the way
for a refinancing of the remaining term loan by reducing the
outstanding balance. And third, it extends the maturity of
approximately $500 million of debt by three years. Since putting
the term loan in place in November 2019, we have repaid over $175
million to date, and we expect to repay an additional $100 million
in the coming months. Pro forma for these repayments, the
outstanding term loan will be approximately $1 billion, which we
believe we can refinance on attractive terms by the end of the
first half of 2021. As we improve the Company’s capital structure,
we are also seeing continued improvement in our revenue trends,
which we expect will drive strong fourth quarter results.”
"Apollo and its funds are pleased to continue to support
Gannett, its strong management team, and its commitment to premium
journalism,” said Robert Givone, Partner and Co-Head Opportunistic
Credit. “Working collaboratively, we crafted a creative approach to
address Gannett’s desire to rapidly strengthen its balance sheet.
The refinancing is indicative of the types of capital solutions
that Apollo is uniquely situated to provide to great
companies."
The refinancing was unanimously approved by the Company’s Board
of Directors. The Company was advised by Greenhill & Co., LLC
and Cravath, Swaine & Moore LLP.
Additional Information about the
Notes
On November 17, 2020, the Company entered into an Exchange
Agreement with the lenders under the Company’s senior secured 11.5%
term loan Credit Agreement dated November 19, 2019 (the “Credit
Agreement”) pursuant to which the Company and such lenders agreed
to exchange $497.1 million in aggregate principal amount of the
Company’s newly issued 6.0% Senior Secured Convertible Notes due
2027 (the “Notes”) for the retirement of an equal amount of term
loans under the Credit Agreement (the “Exchange”). Following the
Exchange, the outstanding balance under the Credit Agreement is
$1.118 billion (the “Remaining Term Loan”). The interest expense
savings from the Exchange will be applied to reduce the outstanding
amount of the Remaining Term Loan (the “Required
Amortization”).
The Notes were issued pursuant to an Indenture (the “Indenture”)
dated as of November 17, 2020, between the Company and U.S. Bank
National Association, as trustee. The Company will pay interest on
the Notes at an annual rate of 6.0% payable on June 1 and December
1 of each year, beginning on June 1, 2021. The Notes will mature on
December 1, 2027, unless earlier repurchased or converted. The
Indenture includes affirmative and negative covenants that are
substantially consistent with the Remaining Term Loan, as well as
customary events of default.
In connection with the Exchange, the Credit Agreement has been
amended to, among other things, require quarterly amortization
payments in an amount equal to the interest rate savings resulting
from the Exchange for the applicable quarter.
The holders of the Notes will be entitled to customary
registration rights with respect to their as-converted Common Stock
(subject to minimum registration amounts, blackout periods and
limitations on the number of demands) following the 30-day
anniversary of the closing date.
Conversion
The Notes may be converted at any time by the holders into cash,
shares of the Company’s common stock (“Common Stock”) or any
combination of cash and Common Stock, at the Company’s election
(except as discussed in the next paragraph). The initial conversion
rate is 200 shares of Common Stock per $1,000 principal amount of
the Notes (which is equal to a conversion price of $5.00 per share
of Common Stock (the “Conversion Price”), representing a conversion
premium of approximately 187% based on the closing price of $1.74
per share of Common Stock on November 16, 2020).
The issuance of Common Stock upon conversion of the Notes is
subject to approval of the Company’s stockholders pursuant to Rule
312 of the Listed Company Manual of the New York Stock Exchange. As
promptly as practicable after the issuance date (and in any event
within 30 business days after the issuance date), the Company will
prepare and file a proxy statement with the Securities and Exchange
Commission that includes a proposal for the Company’s shareholders
to approve the issuance of Common Stock upon conversion of the
Notes as required under the rules and regulations of the New York
Stock Exchange (the “Full Conversion”) at a special meeting of the
Company’s shareholders. If the required shareholder approval is not
obtained, (1) the Company will seek shareholder approval of the
Full Conversion at the Company’s 2021 annual meeting and (2) the
Notes that would upon conversion into Common Stock represent more
than 19.9% of the existing total Common Stock of the Company will
be convertible into cash only, until such shareholder approval is
received. If, on the one-year anniversary of the issuance date, the
shareholders have not received approval and the Remaining Term Loan
is still outstanding, the coupon of the Notes will increase by
1.50% and the Required Amortization will be adjusted accordingly.
If, on the two-year anniversary of the issuance date, the
shareholders have not received approval and the Remaining Term Loan
is still outstanding, the coupon will increase by an additional
1.50% and the Required Amortization will be adjusted
accordingly.
The conversion rate is subject to customary adjustment
provisions as provided in the Indenture. In addition, the
conversion rate will be subject to adjustment in the event of any
issuance or sale of Common Stock (or securities convertible into
Common Stock) at a price equal to or less than the Conversion Price
in order to ensure that following such issuance or sale, the Notes
would be convertible into approximately 42% of the Common Stock
after giving effect to such issuance or sale (assuming the initial
principal amount of the Notes remains outstanding).
Upon the occurrence of a “Make-Whole Fundamental Change” (as
defined in the Indenture), the Company will in certain
circumstances increase the conversion rate for a specified period
of time. If a “Fundamental Change” (as defined in the Indenture)
occurs, the Company will be required to offer to repurchase the
Notes at a repurchase price of 110% of the principal amount
thereof.
Permitted Refinancing of Remaining Term Loan
The Company may refinance the Remaining Term Loan with new first
lien debt, as long as the new first lien debt satisfies the
requirements of a Permitted Refinancing. New first lien debt will
constitute a “Permitted Refinancing” so long as, among other
things, (a) the principal amount of the new debt does not exceed
the balance of the Remaining Term Loan (plus interest and fees),
(b) the all-in-yield of the new debt does not exceed 9.5% per annum
and (c) the other terms of the new debt are no less favorable to
the Company.
In the event that the Company proposes to enter into a Permitted
Refinancing, Holders of the Notes will have the option to require
the Company to repurchase their Notes at a price equal to 101.5% of
par, which amount will increase by 1.5% on each three month
anniversary of the issuance date of the Notes. The Indenture
permits the Company to raise additional first lien or second lien
debt to finance any such repurchases, subject to certain conditions
set forth therein.
Other Put Rights
Holders of the Notes will have the right to put up to
approximately $100 million of the Notes at par, (a) for as long as
the Remaining Term Loan remains outstanding, on or after the fourth
anniversary of the issuance date, or (b) after a Permitted
Refinancing, on or after the date that is 91 days after the
maturity date of such Permitted Refinancing.
Redemption Rights
Until the four-year anniversary of the issuance date, the
Company will have the right to redeem for cash up to approximately
$100 million of the Notes at a redemption price of 130% of the
principal amount thereof, with such amount reduced ratably by any
principal amount of Notes that has been converted by the holders or
redeemed or purchased by the Company.
Collateral
The Notes are guaranteed by Gannett Holdings LLC and any
subsidiaries of the Company (collectively, the “Guarantors”) that
guarantee the Remaining Term Loan. The Notes will be secured by the
same collateral securing the Remaining Term Loan. The Notes rank as
senior secured debt of the Company, with the following collateral
priorities: (i) prior to a Permitted Refinancing of the Remaining
Term Loan, the Notes and Remaining Term Loan will share in the
collateral under the Remaining Term Loan on a pari passu basis; and
(ii) following any Permitted Refinancing, the Notes will be secured
by a second priority lien on the same collateral package securing
the indebtedness incurred in connection with the Permitted
Refinancing.
About Gannett
Gannett Co., Inc. (NYSE: GCI) is an innovative, digitally
focused media and marketing solutions company committed to the
communities in our network and helping them build relationships
with their local businesses. With an unmatched reach at the
national and local level, Gannett touches the lives of millions
with our Pulitzer-Prize winning content, consumer experiences and
benefits, and advertiser products and services. Its portfolio
includes the USA TODAY, local media organizations in 46 states in
the U.S. and Guam, and Newsquest, a wholly owned subsidiary with
over 140 local media brands operating in the United Kingdom.
Gannett also owns the digital marketing services companies
ReachLocal, Inc., UpCurve, Inc., and WordStream, Inc. and runs the
largest media-owned events business in the U.S., Gannett Ventures,
formerly GateHouse Live. To connect with us, visit
www.gannett.com.
Cautionary Statement Regarding
Forward-Looking Statements
Certain items in 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 our expectations, in terms of both
amount and timing, with respect to debt repayment and debt
refinancing, and statements regarding expected earnings results.
These statements are based on management’s current expectations and
beliefs 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 the forward-looking
statements, many of which are beyond our control. The Company can
give no assurance its expectations will be attained. Accordingly,
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 such forward-looking statements, see the
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 filings with the Securities and Exchange Commission.
Furthermore, 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 any forward-looking statements. Such
forward-looking statements speak only as of the date of this press
release. The Company expressly disclaims any obligation to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company’s
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
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version on businesswire.com: https://www.businesswire.com/news/home/20201117005831/en/
For investor inquiries, contact: Ashley Higgins Investor
Relations 212-479-3160 investors@gannett.com For media
inquiries, contact: Stephanie Tackach Director, Public
Relations 212-715-5490 stackach@gannett.com
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