Business Context and Reporting Period
This Form 8-K was filed by Nexstar Broadcasting Group, Inc. on April 5, 2010. The filing primarily discloses a proposed capital restructuring involving the issuance of senior secured second lien notes and an amendment to existing credit facilities. The financial data provided covers the fiscal year ended December 31, 2009.
Key Financial Metrics (Fiscal Year 2009)
| Metric | Value (in thousands) |
|---|---|
| Income from Operations | $8,201 |
| Broadcast Cash Flow | $81,782 |
| Adjusted EBITDA | $63,221 |
| Covenant EBITDA | $69,599 |
| Free Cash Flow | $19,915 |
| Cash Interest Expense | $25,249 |
| Capital Expenditures | $19,028 |
Debt and Liquidity Context: The company intends to issue $325.0 million in senior secured second lien notes. Proceeds, combined with borrowings and cash on hand, will be used to repurchase outstanding 13% senior subordinated payment-in-kind notes due 2014 and refinance existing senior secured credit facilities.
Material Changes vs. Prior Period
- Operating Income: Improved significantly from a loss of $38.2 million in 2008 to a profit of $8.2 million in 2009.
- Impairment Charges: Non-cash impairment of goodwill and intangible assets decreased drastically from $82.4 million in 2008 to $16.2 million in 2009.
- EBITDA Measures: Broadcast Cash Flow declined from $111.7 million in 2008 to $81.8 million in 2009. Adjusted EBITDA fell from $96.2 million to $63.2 million.
- Free Cash Flow: Decreased from $26.4 million in 2008 to $19.9 million in 2009, driven by higher cash interest expenses and capital expenditures relative to operating cash generation.
Guidance, Outlook, and Risks
Capital Restructuring: Nexstar Broadcasting, Inc. and co-issuer Mission Broadcasting, Inc. plan to offer $325.0 million in notes. Concurrently, they propose amending their senior secured credit facilities to extend maturities, adjust leverage covenants, and reduce revolving commitments to an aggregate $75.0 million while refinancing Term Loan B facilities totaling $100.0 million.
Conditions and Risks: The note offering is conditioned upon the effectiveness of the credit facility amendments. Although lender commitments have been received, the filing states there is no assurance the amendment will be completed as contemplated. Forward-looking statements are subject to risks including economic changes, advertising pricing fluctuations, regulatory actions, and the ability to service debt.
Investor Verification Checklist
- Confirm the successful closing of the $325.0 million senior secured second lien note offering.
- Verify the effectiveness of the proposed amendments to the senior secured credit facilities.
- Monitor the execution of the repurchase of the 13% senior subordinated payment-in-kind notes due 2014.
- Review the impact of the reduced revolving commitments ($75.0 million aggregate) on future liquidity.
- Assess the company's ability to meet adjusted leverage covenants under the new debt structure.