May 23, 2018 / 10:30 AM / a year ago

Imagina returns for second shot at loan market

(LPC) - Spanish sports media group Imagina has returned to the loan market with a reshaped buyout financing, after the deal was initially delayed in syndication in March following a lukewarm reception from investors amid a corruption probe at one of the group’s US subsidiaries.

Proceeds back Chinese private equity firm Orient Hontai Capital’s buyout of Imagina. Deutsche Bank is leading the deal, alongside Citigroup and Goldman Sachs.

The deal now comprises a €380 million seven-year term loan B, a €300 million six-year amortizing term loan A and a €60 million six-year revolving credit, as well as a new pre-placed €180 million second-lien loan that is priced at 750bp over Euribor.

The initial deal was split between a bigger €660 million term loan B and a smaller €200m term loan A.

The changes reduce senior leverage from 3.4 times Ebitda to 2.6 times, while improving the expected corporate ratings from B1/BB-/BB- to Ba3/BB/BB-.

An investor call and one-to-one meetings are scheduled for Wednesday, with final commitments due on May 30.

The term loan B is guided at 450bp over Euribor, the term loan A is guided at 400bp over Euribor, and the revolving credit facility is guided at 375bp over Euribor. All three facilities have a 0 percent floor.

The term loan B is offered at 98-98.5 and the term loan A at 99.25.

There is a gross senior leverage and total leverage maintenance covenant included in the deal, a rare sight in today’s leveraged loan market.

The lead banks were forced to delay syndication of the loan prior to Easter following a lukewarm reception from the market. Investors’ concerns centered around corruption allegations circling one of Imagina’s US subsidiaries, Media World Sports, which Reuters reported previously.

Investors also raised questions over how much the company would pay for rights to screen football matches.

Media World Sports’ chief executive Roger Huguet and another executive pleaded guilty to corruption charges from the US Department of Justice in late 2015. Huguet is due to be sentenced next month.

“We’re not fans of the sector,” said a credit analyst in London. “Football has a lot of corruption issues, and there’s always the question of where the money is coming from.”

While a number of investors were attracted to the business, other question its resilience, especially around contracts.

“There are questions over how much they pay for football rights and how they’ve gone about obtaining certain things in the business, subject to DoJ investigations and corruption charges. There are also contract cliffs,” another investor said.

Another sticking point for some investors was the relative obscurity of the sponsor Orient Hontai Capital, a Chinese buyout firm that has not entered the European leveraged market previously.

The buyout was made at a multiple of 10 times 2016 Ebitda and valued the company at €1.9 billion. Orient Hontai will take a 53.5 percent stake in the group.

Imagina is one of Europe’s largest audiovisual and sports media groups. Its subsidiaries include Mediapro, the sport TV rights distributor, film producer and audiovisual production center operator. Imagina had revenues of €1.54 billion in 2016 and Ebitda of €162 million.

Editing by Christopher Mangham

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