9. SUBSEQUENT EVENTS

Fifth Supplemental Indenture

On July 13, 2018, in connection with our outstanding 7.15% debentures due November 1, 2027 (“2027 Debentures”) and 6.875% debentures due March 15, 2029 (“2029 Debentures” and together with the 2027 Debentures, “Debentures”), we entered into a Fifth Supplemental Indenture (“Supplemental Indenture”) by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (“Debentures Trustee”), supplementing that certain Indenture, dated as of November 4, 1997, by and between the Company and the Debentures Trustee (“Debentures Indenture”), pursuant to which the Debentures were issued.

The Supplemental Indenture was entered into in connection with our refinancing of existing indebtedness to amend the Debentures Indenture to eliminate certain restrictive covenants.

2026 Notes Indenture

On July 16, 2018, we entered into the 2026 Notes Indenture pursuant to which we issued $310.0 million aggregate principal amount of the 2026 Notes in a private placement to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act of 1933, as amended (“Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.

The 2026 Notes mature on July 15, 2026, and bear interest at a rate of 9.00% per annum. Interest on the 2026 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2019.

We may redeem the 2026 Notes, in whole or in part, at any time on or after July 15, 2022, at specified redemption prices and may also redeem up to 40% of the aggregate principal amount of the 2026 Notes using the proceeds of certain equity offerings completed before July 15, 2021, at specified redemption prices, in each case, as set forth in the 2026 Notes Indenture. Prior to July 15, 2022, we may also redeem some or all of the 2026 Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date and a “make-whole” premium.

We will be required to redeem the 2026 Notes from the net cash proceeds of certain asset dispositions and from a portion of our excess cash flow (as defined in the 2026 Notes Indenture).

If we experience specified changes of control triggering events, we must offer to repurchase the 2026 Notes at a repurchase price equal to 101% of the principal amount of the 2026 Notes repurchased, plus accrued and unpaid interest, if any, to, but excluding the applicable repurchase date.

The 2026 Notes Indenture contains covenants that, among other things, restrict the ability of us and our restricted subsidiaries to:

incur certain additional indebtedness and issue preferred stock;

make certain distributions, investments and other restricted payments;

pay dividends;

sell assets;

agree to any restrictions on the ability of restricted subsidiaries to make payments to us;

create liens;

merge, consolidate or sell substantially all of our assets, taken as a whole; and

enter into certain transactions with affiliates.

These covenants are subject to a number of other limitations and exceptions set forth in the 2026 Notes Indenture.

The 2026 Notes Indenture provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements, or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2026 Notes under the 2026 Notes Indenture will become due and payable immediately without further action or notice. If any other event of default under the 2026 Notes Indenture occurs or is continuing, the 2026 Notes Trustee or holders of at least 25% in aggregate principal amount of the then outstanding 2026 Notes under the 2026 Notes Indenture may declare all of such 2026 Notes to be due and payable immediately.

ABL Credit Agreement

On July 16, 2018, we entered into the ABL Credit Agreement, which provides for a $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provides for a $35.0 million cash secured letter of credit facility. The commitments under the ABL Credit Agreement expire July 16, 2023. The Borrowers’ obligations under the ABL Credit Agreement are guaranteed by us and certain of our subsidiaries meeting materiality thresholds set forth in the ABL Credit Agreement.

The borrowing base under the ABL Credit Agreement is comprised of 85% of eligible advertising accounts; the lesser of (i) 80% of eligible unbilled advertising accounts receivable and (ii) $3.0 million; and the lesser of (i) $6.0 million and (ii) 50% of the book value of eligible inventory, in each case subject to reserves established by the administrative agent (“Borrowing Base”). The proceeds of the loans under the ABL Credit Agreement may be used for working capital and general corporate purposes. The Borrowers have the right to prepay loans under the ABL Credit Agreement in whole or in part at any time without penalty. Subject to availability under the Borrowing Base, amounts repaid may be reborrowed.

As of July16, 2018, under the ABL Credit Agreement we had availability of $46.4 million, and $10.0 million was borrowed to pay expenses associated with the refinancing transactions (leaving $36.4 million in additional availability). The $10.0 million outstanding under the ABL Credit Agreement was repaid during the third quarter of 2018. The borrowing base is recalculated monthly and is not expected to be subject to material changes in availability except in the fourth quarter of 2018 and early in the first quarter of 2019 when it is expected to increase as a result of the seasonality of advertising sales around year-end holiday periods (and resulting growth in advertising accounts receivable balances).

Loans under the ABL Credit Agreement bear interest, at our option, at either a rate based on LIBOR for the applicable interest period or a base rate, in each case plus a margin. The base rate is the highest of Wells Fargo’s publicly announced prime rate, the federal funds rate plus 0.50% or one-month LIBOR plus 1.0%. The margin ranges from 1.75% to 2.25% for LIBOR loans and 0.75% to 1.25% for base rate loans and is determined based on average excess availability. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of LIBOR loans.

The ABL Credit Agreement requires, at any time the availability under our revolving credit facility falls below the greater of 12.5% of the total facility size or approximately $8.1 million, to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 until such time as the availability under our revolving credit facility exceeds such threshold for 30 consecutive days.

The ABL Credit Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the ABL Credit Agreement contains customary negative covenants limiting our ability and the ability of our subsidiaries, among other things, to incur debt, grant liens, make investments, make certain restricted payments and sell assets, subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the ABL Credit Agreement immediately due and payable and may exercise the other rights and remedies provided for under the ABL Credit Agreement and related loan documents. The events of default under the ABL Credit Agreement include, subject to grace periods in certain instances, payment defaults, cross defaults with certain other indebtedness, breaches of covenants or representations and warranties, change in control of us and certain bankruptcy and insolvency events with respect to us meeting a materiality threshold set forth in the ABL Credit Agreement.

Junior Lien Term Loan Agreement

On July 16, 2018, we entered into the Junior Term Loan Agreement, which provides for a $157.1 million Tranche A Junior Term Loans and a $193.5 million Tranche B Junior Term Loans (collectively “Junior Term Loans”). The Tranche A Junior Term Loans mature and principal is payable on July 15, 2030 and the Tranche B Junior Term Loans mature and principal is payable on July 15, 2031. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes as set forth in the Junior Term Loan Agreement. Pursuant to the terms of the Junior Term Loan Agreement, affiliates of Chatham Asset Management, LLC may elect to convert up to $75.0 million in aggregate principal amount of 2029 Debentures owned by them into an equal principal amount of Tranche B Junior Term Loans or notes with terms substantially similar to the Tranche B Junior Term Loans upon written notice to us.

The Junior Term Loans were issued at premiums in order to use the proceeds of the loans to repurchase certain unsecured debentures at a quoted value as the close of business on July 13, 2018, and to use the remaining proceeds, along with the issuance of our 2026 Notes, to repurchase our 2022 Notes (see “Satisfaction and Discharge of 2022 Notes” and discussions below).

The proceeds of the loans under the Junior Term Loan Agreement were used to effect the exchange with the lender of approximately $82.1 million in aggregate principal amount of 2027 Debentures, approximately $193.5 million in aggregate principal amount of 2029 Debentures and to pay fees, costs and expenses in connection with the debt refinancing.

We have the right to prepay loans under the Junior Term Loan Agreement, in whole or in part, at any time, at (i) specified prices that decline over time, plus accrued and unpaid interest, if any, in the case of Tranche A Junior Term Loans, and (ii) a price equal to 100% of the principal amount thereof, plus a “make-whole” premium and accrued and unpaid interest, if any, in the case of the Tranche B Junior Term Loans. Amounts prepaid may not be reborrowed.

Tranche A Junior Term Loans bear interest at a rate per annum equal to 7.795% and Tranche B Junior Term Loans bear interest at a rate per annum equal to 6.875%. Interest on the loans is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019.

The Junior Term Loan Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the Junior Term Loan Agreement contains customary negative covenants limiting the ability of us, among other things, to incur debt, grant liens, make investments, make certain restricted payments and sell assets, subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the Junior Term Loan Agreement immediately due and payable and may exercise the other rights and remedies provided for under the Junior Term Loan Agreement and related loan documents. In general the affirmative and negative covenants of the Junior Term Loan Agreement are substantially the same as the covenants in the 2026 Notes Indenture.

Satisfaction and Discharge of 2022 Notes

On July 16, 2018, we deposited sufficient funds with the 2022 Notes Trustee to pay the redemption price payable in respect of all outstanding 2022 Notes, plus accrued and unpaid interest on the 2022 Notes up to, but excluding, the redemption date. The 2022 Notes were issued under the 2022 Notes Indenture.

As a consequence of the foregoing, we satisfied and discharged our obligations (subject to certain exceptions) under the 2022 Notes Indenture and the related security documents in accordance with the satisfaction and discharge provisions of the 2022 Notes Indenture. Upon the satisfaction and discharge of the 2022 Notes Indenture on July 16, 2018, all of the liens on the collateral securing the 2022 Notes were released and we and the guarantors were discharged from our respective obligations under the 2022 Notes and the guarantees thereof.

On July 16, 2018, the 2022 Notes Trustee, at our direction, delivered a notice of redemption to holders of all $344.1 million in aggregate principal amount of outstanding 2022 Notes. We paid a redemption premium of $15.5 million, which was equal to 4.5% of the outstanding principal amount.

The following table summarizes our ABL Credit Agreement and long-term debt as of July 16, 2018:


	Face Value at
	July 16,
(in thousands)	2018
ABL Credit Agreement	$	10,000
Notes:
9.00% senior secured notes due in 2026		310,000
7.795% tranche A junior term loan due in 2030		157,083
6.875% tranche B junior term loan due in 2030		193,466
7.150% unsecured debentures due in 2027		7,105
6.875% unsecured debentures due in 2029		82,764
Total long-term debt	$	760,418

The $10.0 million on the ABL Credit Agreement debt is due within the next five years and all other debt is due thereafter.

We expect to record a gain on extinguishment of debt related to our debt refinancing in the third quarter of 2018.