MediaCo Holding Inc. — Form 8-K Summary
Report date: December 13, 2019; filed December 18, 2019. The filing reports the completion of an acquisition, related financing, issuance of preferred equity, and amendments to the company’s charter and credit facility.
Business Context and Transaction
- MediaCo assumed Billboards LLC’s rights and obligations under an October 16, 2019 Equity Purchase Agreement with Fairway Outdoor Advertising Group.
- The acquired companies, FMG Kentucky, LLC and FMG Valdosta, LLC, sell outdoor advertising space and produce billboard signs in Kentucky and the Valdosta, Georgia area.
- The transaction closed on December 13, 2019 for an aggregate purchase price of approximately $43.0 million, subject to adjustments for working capital, cash, indebtedness, and specified accounting matters.
- Billboards LLC is a wholly owned subsidiary of Standard General L.P., which is affiliated with MediaCo’s controlling shareholder, SG Broadcasting LLC.
Financing, Capitalization, and Liquidity
- MediaCo amended and restated its senior secured term loan agreement and incurred approximately $23.5 million of incremental term loans.
- The acquired companies were added as borrowers under the amended credit facility.
- MediaCo issued 220,000 Series A Convertible Preferred Shares to SG Broadcasting in exchange for a $22.0 million cash contribution.
- The Series A Preferred Shares rank senior to the company’s Class A, Class B, and Class C common stock and have liquidation and distribution preferences.
- Preferred shares accrue cumulative dividends payable in kind at the interest rate on the company’s senior debt, or 6% if no senior debt is outstanding, with an additional 1% increase on December 12, 2020 and each anniversary thereafter.
- Beginning May 25, 2020, each preferred share may be converted at the holder’s option into common stock based on the original purchase price plus accrued dividends divided by the applicable 30-day volume-weighted average common-stock price.
Financial Results and Material Changes
The 8-K does not provide revenue, net income, operating cash flow, margins, total debt, cash balances, or other period-end financial results. Accordingly, the filing text does not provide a clear value for those metrics or a comparable-period analysis.
- Material changes include the acquisition of two outdoor advertising businesses, approximately $23.5 million of incremental term debt, and $22.0 million of preferred-equity financing.
- The transaction also increased the company’s senior preferred capital structure and introduced cumulative paid-in-kind dividends and conversion rights.
Outlook, Contingencies, and Unusual Items
- Fairway will provide transitional services to the acquired companies for an initial term of 120 days.
- The purchase agreement included customary representations, warranties, covenants, indemnities, and closing conditions. The filing does not identify a material unresolved contingency.
- The preferred stock issuance was made in reliance on the private-placement exemption under Section 4(a)(2) of the Securities Act.
- Shareholders approved the preferred stock issuance by unanimous written consent on December 13, 2019.
- MediaCo designated 300,000 shares of Series A Preferred Stock under Articles of Amendment; 220,000 shares were issued at closing.
- The company stated that acquired-business financial statements and pro forma financial information would be filed by amendment within 71 calendar days after the required filing date.
Key Facts for Investors to Verify
- Final purchase price adjustment and accounting treatment for the acquisition.
- Acquired companies’ historical financial statements and pro forma contribution to MediaCo’s results.
- Final terms, interest rate, maturity, covenants, collateral, and amortization schedule of the amended senior credit facility.
- Effect of cumulative paid-in-kind preferred dividends on future leverage and common-stock value.
- Potential dilution from conversion of the Series A Preferred Shares.
- Revenue growth, margins, cash generation, and integration performance of the Kentucky and Valdosta operations in subsequent filings.