Gannett entered into a commitment letter for a comprehensive debt refinancing that is expected to extend our debt maturities and significantly reduce future dilution from the Company’s 6.0% Senior Secured Convertible Notes due 2027 (the “2027 Notes”).
The commitment letter provides for a new senior secured credit facility (the “Term Loan Facility”) with funds managed by affiliates of Apollo of up to $900 million, to be comprised of an initial term loan facility of approximately $675 million (the “Initial Term Facility”), to be funded at the time of closing, and a delayed draw term loan facility of approximately $225 million (the “Delayed Draw Facility”), which will be available at the Company’s discretion at closing and during the six months following closing, subject to certain customary funding conditions. Net proceeds from the Term Loan Facility will be used to repay in full the outstanding principal of the Company’s five-year senior secured term loan facility maturing October 15, 2026, to purchase or redeem the 6.0% first lien notes due November 1, 2026 (the “2026 Notes”) and to repurchase for cash up to 50% of the outstanding 2027 Notes. The Term Loan Facility will mature five years after the closing date and will bear interest at an annual rate equal to SOFR plus a margin of 5.0% with a floor of 150 basis points.
Gannett intends to make an offer to the holders of outstanding 2026 Notes for, at the election of holders, cash consideration at a price of $1,000 for each $1,000 principal amount of 2026 Notes tendered or loans under the Term Loan Facility on a par-for-par basis. As part of these overall transactions, the Apollo Funds have agreed to tender for cash all the 2026 Notes held by such Apollo Funds (having an aggregate principal amount of approximately $81 million) in the exchange offer. The proceeds of the Delayed Draw Facility may be used to repurchase any additional 2026 Notes that are tendered for cash at the time of closing in connection with the exchange offer or to later redeem the outstanding balance of the 2026 Notes in accordance with the terms of the indenture for the 2026 Notes.
In addition, as part of the refinancing transactions, Apollo Funds have agreed to exchange approximately $441 million principal amount of 2027 Notes, with 50% of the aggregate principal amount to be exchanged for cash at a rate of $1,110 per $1,000 principal amount of 2027 Notes and 50% of the aggregate principal amount to be exchanged for new 6.0% Senior Secured Convertible Notes due 2031 (the “2031 Notes”) and otherwise having substantially similar terms to the existing notes. Gannett may redeem up to 30% of the outstanding principal amount of the 2031 Notes at a redemption price of 140% prior to December 1, 2030 (or, under certain circumstances, prior to December 1, 2028). Subject to applicable law, Gannett may repurchase and exchange additional 2027 Notes in individually negotiated, private transactions.
The transactions are expected to close later this fall, subject to any required approvals and customary closing conditions. Other than the tender and exchange transactions with Apollo Funds, there can be no assurance that the exchange offer for the 2026 Notes or that any offer we make to repurchase and exchange any 2027 Notes will be successful.
“This committed plan of refinancing is a significant milestone and the next step on our path towards anticipated sustainable long-term growth and value creation,” said Michael Reed, Chairman and Chief Executive Officer. “We believe our ability to successfully refinance our existing facilities, while extending the term loan maturity date to 2029 and significantly reducing the future impact of the 2027 Notes, reflects Gannett's long-term strategy and the progress made against the strategy from an execution standpoint. We believe this refinancing shows Apollo's commitment to being an excellent partner to Gannett, especially as it relates to our capital structure. We believe this new financing gives the Company generous runway to repay its debt, and the reduced future dilution from the convertible notes is expected to be significant for our shareholders. We believe this transaction announced today creates the time and flexibility for further investment in growth in order to achieve our transformation and fully unlock value for our shareholders.”
Apollo Partner and Head of Portfolio Strategy Robert Givone said, “We continue to be supportive of Gannett. We believe this comprehensive refinancing will enable Gannett to further strengthen its balance sheet and enhance its financial flexibility, and that the transactions demonstrate the creative capital solutions that Apollo is able to provide to great companies.”