TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
On
September 30, 2005, Lamar Media Corp. (“Lamar Media”
or “we”), a wholly owned subsidiary of Lamar
Advertising Company (the “Company”), refinanced its existing bank credit facility with a new bank
credit facility. The new bank
credit facility, for which JPMorgan Chase Bank, N.A. serves as
administrative agent, consists of a $400 million revolving
credit facility, a $400 million term loan facility and a
$500 million incremental facility. We may designate a
wholly owned subsidiary as a subsidiary borrower under the
incremental loan facility that can borrow up to
$50.0 million of the incremental facility on or before
March 31, 2006. Our lenders have no obligation to make
additional loans to us, or any designated subsidiary borrower,
under the incremental facility, but may enter into such
commitments in their sole discretion.
Reductions in commitments; amortization
The term loans will begin amortizing in quarterly installments
paid on each December 31, March 31, June 30 and
September 30 as follows:
| |
|
|
| |
| Principal Payment Date |
|
Principal Amount | |
| |
|
December 31, 2007—
September 30, 2009
|
|
$ 5,000,000
|
|
December 31, 2009—
September 30, 2011
|
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$15,000,000
|
|
December 31, 2011—
September 30, 2012
|
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$60,000,000
|
| |
The term loan facility and the revolving credit facility will
mature September 30, 2012.
Interest
Interest on borrowings under the facilities is calculated, at
our option, at a base rate equal to either of the following plus
the applicable spread above such base rate:
• with respect to base rate borrowings, the
“Adjusted Base Rate” which is equal to the higher of:
the rate publicly announced by JPMorgan Chase Bank, N.A. as its
prime lending rate and the applicable federal funds rate, plus
0.5%; or
• with respect to eurodollar rate borrowings, the rate
at which eurodollar deposits for one, two, three or six months
(as selected by us), or nine or twelve months with the consent
of the lenders, are quoted on the Dow Jones Telerate Screen
multiplied by the statutory reserve rate (determined based on
maximum reserve percentages established by the Board of
Governors of the Federal Reserve System of the United States of
America).
The spread applicable to borrowings under the revolving bank
credit facility and term facility is determined by reference to
our trailing leverage ratio (total debt to trailing four fiscal
quarter EBITDA, as defined in the new bank credit facility,
see “—Covenants” below).
Guarantees; Security
Our obligations under our new bank credit facility are
guaranteed by Lamar Advertising and all of our restricted
subsidiaries, other than certain non-guarantor restricted
foreign subsidiaries. Currently, these guarantor subsidiaries
include all of our existing subsidiaries, except Missouri Logos,
a Partnership, Canadian TODS Limited, Lamar Transit Advertising
Canada, Ltd. and Lamar Canadian Outdoor Company. The guarantees
are secured by a pledge of all of our capital stock and all of
the capital stock of those subsidiaries.
Covenants
Under the terms of the new bank credit facility, we and our
restricted subsidiaries are not permitted to incur any
additional indebtedness over $150 million at any one time
outstanding except:
• indebtedness created by the new bank credit facility;
• indebtedness in respect of notes issued by us so
long as no default exists at the time of the issuance or would
result from the issuance and the terms of the notes comply with
certain conditions;
• existing indebtedness or any extension, renewal,
refunding or replacement of any existing indebtedness or
indebtedness incurred by the issuance of notes as referred to in
the paragraph above;
• mirror loan indebtedness of ours in an amount up to
but not exceeding $287.5 million that is payable to Lamar
Advertising Company and subordinated to all our obligations and
containing certain other specified terms;
• indebtedness of ours to any wholly owned subsidiary
and of any wholly owned subsidiary to us.
The new bank credit facility also places certain restrictions
upon our, and our restricted subsidiaries’, ability to,
among other things:
• incur liens or guarantee obligations;
• pay dividends and make other distributions including
distributions to Lamar Advertising;
• make investments and enter into joint ventures or
hedging agreements;
• dispose of assets; and
• engage in transactions with affiliates except on an
arms-length basis.
In addition, under the new bank credit facility we and our
restricted subsidiaries cannot exceed the following financial
ratios:
• a total debt ratio, defined as total consolidated
debt to EBITDA, as defined below, for the most recent four
fiscal quarters, of 6.00 to 1 from September 30, 2005
through September 30, 2007 and 5.75 to 1 from
October 1, 2007; and
• a senior debt ratio, defined as total consolidated
senior debt to EBITDA, as defined below, for the most recent
four fiscal quarters, of 3.25 to 1.
The new bank credit facility also requires us and our
restricted subsidiaries to maintain the following financial
ratios:
• an interest coverage ratio, defined as the ratio of
EBITDA, as defined below, for the most recent four fiscal
quarters to total consolidated accrued interest expense for that
period, of less than or equal to 2.25 to 1; and
• a fixed charges coverage ratio, defined as the ratio
of EBITDA, as defined below, for the most recent four fiscal
quarters to (1) the total payments of principal and
interest on debt for such period plus (2) capital
expenditures made during such period plus (3) income and
franchise tax payments made during such period, of less than or
equal to 1.05 to 1.
As defined under the new bank credit facility, EBITDA is,
for any period, operating income for Lamar Media and our
restricted subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP) for such period
(calculated before taxes, interest expense, interest in respect
of mirror loan indebtedness, depreciation, amortization and any
other non-cash income or charges accrued for such period and
(except to the extent received or paid in cash by us or any of
our restricted subsidiaries) income or loss attributable to
equity in affiliates for such period) excluding any
extraordinary and unusual gains or losses during such period and
excluding the proceeds of any casualty events whereby insurance
or other proceeds are received and certain dispositions not in
the ordinary course. Any restricted payment made by Lamar Media
or any of our restricted subsidiaries to Lamar Advertising
during any period to enable Lamar Advertising to pay certain
qualified expenses on behalf of Lamar Media and its
subsidiaries, shall be treated as operating expenses of Lamar
Media for the purposes of calculating EBITDA for such period if
and to the extent such operating expenses would be deducted in
the calculation of EBITDA if funded directly by Lamar Media or
any restricted subsidiary.
EBITDA under the new bank credit facility is also adjusted to
reflect certain acquisitions or dispositions as if such
acquisitions or dispositions were made on the first day of such
period.
Change of control
A change of control of Lamar Media constitutes an event of
default, permitting the lenders to accelerate the indebtedness
and terminate the new bank credit facility. A change in
control would occur if:
• we cease to be a wholly owned subsidiary of Lamar
Advertising;
• Charles W. Lamar, III or Kevin P.
Reilly, Sr. and their immediate family (including
grandchildren) and entities under their control no longer hold
sufficient voting stock of Lamar Advertising to elect at all
times a majority of its board of directors;
• anyone other than the holders specified in the
preceding bullet acquire shares of Lamar Advertising
representing more than 20% of the ordinary voting power or
acquire control of Lamar Advertising;
• a majority of the seats on Lamar Advertising’s
board is occupied by persons who were neither nominated by the
board of directors of Lamar Advertising nor appointed by
directors so nominated; or
• the occurrence of any “change of control”
under and as defined in the indentures for the
65/8% senior
subordinated notes due 2015, the
71/4% senior
subordinated notes due 2013 or certain notes that may be
hereinafter issued (including refunding indebtedness).
In
connection with the refinancing, Lamar Media terminated its existing
bank credit facility on September 30, 2005. The
terminated bank credit facility, for which JPMorgan Chase Bank, N.A. also served as administrative
agent, consisted of a $225 million revolving bank credit facility, a $975 million term facility
with two tranches (a $425 million Term A facility and a $550 million Term D facility), and a $500
million incremental facility and contained terms substantially similar to the terms of the new bank
credit facility.
The lenders under the new bank credit facility and their affiliates perform various financial
advisory, investment banking and commercial banking services from time to time for us and our
affiliates, for which they receive customary fees.
The foregoing description is qualified in its entirety by reference to the credit agreement by and
among Lamar Media Corp., certain of its subsidiaries as Guarantors, the Subsidiary Borrower named
therein, the Lenders named therein and JPMorgan Chase Bank, N.A., as administrative agent, filed as
Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference.
Item 1.02. Termination of a Material Definitive Agreement.
Please refer to the discussion under Item 1.01 above, which is incorporated under this Item 1.02 by
reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Please refer to the discussion under Item 1.01 above, which is incorporated under this Item 2.03 by
reference.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits