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Lamar Restructures Debt - Analyst Blog

Posted: 1/27/2012 4:41:00 PM
Referenced Stocks: CCO;LAMR

Lamar Advertising Company ( LAMR ) recently announced a tender offer to repurchase $600 million principal amount of its 6  5 /8% Senior Subordinated Notes. Each $1000 note has been priced at $1,005.83.

The company's subsidiary, Lamar Media Corp. will repurchase the Notes, comprising 6  5 /8% Senior Subordinated Notes due 2015, 6  5 /8% Senior Subordinated Notes maturing in 2015-Series B and 6  5 /8% Senior Subordinated Notes due 2015-Series C in a tender offer. The repurchase reduces the company's '6  5 /8% notes' outstanding balance from $843.1 million.

The company will fund the notes purchase from $147.2 million of borrowings under the revolving portion of Lamar Media's senior credit facility as well as with the proceeds of a private offering of $500 million worth of notes issuance (due 2022), announced recently by the company. The issuance is likely to raise approximately $489 million, after payment of fees and expenses.

Notwithstanding the purchase and issuance of Notes as mentioned above, Lamar is also seeking a new $100 million term loan of "A" facility under its existing senior credit facility. If granted, the company desires to raise the Notes purchase by $100 million.

In the third quarter 2011, the company's debt level plummeted which pulled down the interest expense by 6.2%. In addition, growth of more than 100% in cash and cash equivalents is worth mentioning.

The current Zacks Consensus Estimate for earnings per share for the fiscal year 2011 and 2012 are 3 cents and 21 cents, representing annual growth of 110.67% and 693.75%, respectively. The Zacks Estimate for the fourth quarter remains at a break-even level, representing growth of 104.55%.

The company is slated to release its fourth quarter results on February 22, 2012.

Lamar is a leading Louisiana-based owner and operator of outdoor advertising structures in the U.S. The company faces stiff competition from its peers in the industry including Clear Channel Outdoor Holdings Inc. ( CCO ).

We currently maintain an Outperform recommendation on the stock.

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