Gray Media has borrowed $750m at 7.5 percent to retire $675m it was paying 10.5 percent on, and it is leaving $350m of the expensive paper outstanding

The coupon came down three full points, and the maturity moved out by five years.

Gray Media said on Friday afternoon that it had closed a $750m issue of 7.500 percent senior secured first lien notes due 15 September 2034, sold at par to institutional buyers under Rule 144A and Regulation S. The proceeds are going to three places, and the first is the reason the deal exists.

It is retiring $675m of 10.500 percent notes due 2029.

The half that is not being retired

The redemption is expected on 27 August, and the company says that when it is done it will still have $350m of the 2029 notes outstanding.

So this is a partial refinancing, and the expensive paper does not all go away. On the numbers in the filing, a full year of interest on the new notes is $56.25m. A full year on the $675m being redeemed was $70.875m. A full year on the $350m staying behind is $36.75m, at the same 10.500 percent it was always paying.

The company does not net any of that out, and it could not without giving figures the filing withholds. It says the proceeds also cover the call premium on the redeemed notes, the accrued interest on them, and the fees on the offering, and it puts no number on any of the three. The new issue is also $75m larger than the amount it retires.

What the indenture allows

The remaining $21m of proceeds repays borrowings under the revolving credit facility.

The notes are guaranteed jointly and severally, on a senior secured first lien basis, by each existing and future restricted subsidiary that guarantees the existing senior credit facility. Interest runs from 21 August, payable on 15 March and 15 September, first payment in March 2027. U.S. Bank Trust Company, National Association is trustee and collateral agent.

The call protection is the part worth reading twice, because it is not one date. Gray may redeem some or all of the notes at the schedule prices at any time after 15 September 2029. Before then it has three narrower routes: a make whole redemption at par plus a premium set in the indenture, a redemption of up to 40 percent at 107.500 percent funded by the net cash proceeds of certain equity offerings and conditioned on at least 60 percent of the original principal staying outstanding, and a redemption of up to 10 percent of the original principal in any calendar year at 103 percent, which may be used no more than three times in total.

The covenants are the usual high yield list. The indenture limits additional debt, restricted payments, affiliate transactions, asset sales, liens, mergers and the designation of unrestricted subsidiaries, and the filing says each of those limits carries important exceptions it does not set out.

The filing is signed for Gray Media, and the release names Jeffrey R. Gignac, the chief financial officer, as its first contact.