New York, December 21, 2018 — Moody’s Investors Service (Moody’s) said Lamar Advertising Company’s ratings are unchanged following the acquisition of billboards in five markets located in North Carolina, South Carolina, Georgia and Wisconsin from Fairway Outdoor Advertising for $418.5 million. Pro forma leverage is expected to increase to 4.0x from 3.7x as of Q3 2018 (excluding Moody’s standard lease adjustments) but is expected to decrease below 4x from continued EBITDA growth absent future acquisitions. The transaction will be funded with an additional $215 million draw on its $450 million revolving credit facility, cash from the balance sheet as well as $175 million from a new AR securitization facility which will not be rated by Moody’s.For further information, please see the issuer comment for Lamar on www.moodys.com.
Lamar Advertising Company (Lamar), with its headquarters in Baton Rouge, Louisiana, is one of the leading owner and operators of advertising structures in the U.S. and Canada. The company generated revenues of approximately $1.6 billion in the LTM period ending Q3 2018.
Insider’s take: Good news for Lamar which is moderately leveraged and can raise equity when needed to keep leverage moderate. Maintaining an investment grade rating translates into cheap borrowing costs. Lamar is funding the Fairway acquisition with debt priced at 0.9% over LIBOR which translates into a cost of 3.8%. Clear Channel’s weighted average cost of debt is 7.1% . Outfront Media’s weighted average cost of debt of 5.0%.
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