(Bloomberg) -- Byron Allen’s Allen Media Group is planning deeper cost cuts as it stares down debt maturities, and has retained advisers, according to people familiar with the matter.
The company, which owns The Weather Channel and other television stations, has engaged Moelis & Co. and Kirkland & Ellis as its own legal counsel, some of the people said, asking not to be identified because the discussions are private. In July, creditors grouped together to tap their own legal advisers.
Allen Media’s debt has been trading at distressed levels over the last few months. The company’s $840 million term loan, which is maturing in 2027, was trading at around 65 cents on the dollar as of Tuesday, down from 88 cents in May, according to data compiled by Bloomberg.
“We’re 100% in compliance with all of our lenders,” a company representative said in an emailed statement, adding its term loan isn’t due until February 2027. “We’re highly confident that we will successfully refinance at that time or before.”
Allen Media also has a $100 million revolver coming due in February 2025. That facility is nearly tapped out, according to a S&P Global Ratings report in July, when the ratings firm lowered Allen Media’s credit rating to CCC+ from B-.
In its report, S&P said Allen Media faced “elevated refinancing risk due to its substantial debt burden.”
“Allen Media has a very limited ability to afford the current market interest rates on its term loan,” S&P said, adding it viewed the firm’s capital structure as “unsustainable.”
On the revolver, S&P said Allen Media would need to extend the facility or generate enough cash to repay it once it matures. Only an increase in cash flow would help make that happen, the ratings firm said.
The company is expecting that boost over the next few months, thanks to political advertising ahead of US elections in November, said people familiar with Allen Media’s earnings.
On a call with investors last week discussing second quarter earnings, Allen Media’s management outlined year-over-year gains and said it expected earnings before interest, taxes, depreciation and amortization to be more than $300 million this year, the people said.
A representative with Moelis declined to comment, while Ducera Partners, Gibson Dunn & Crutcher, who are working with secured lenders, and Paul Weiss Rifkind Wharton & Garrison, retained by unsecured creditors, and Kirkland did not respond to requests for comment.
Allen Media Group owns Entertainment Studios Inc. and several network-affiliated stations. It has previously turned to the broadly syndicated debt markets to fund acquisitions, including its purchase of Honolulu’s KITV and stations owned by Quincy Media.
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