Promotora de Informaciones SA is in talks with its creditor banks to convert part of the biggest Spanish media company’s debt into payment-in-kind notes, according to two people familiar with the matter.
Lenders may swap loans into high-risk, high-yield PIK notes to shore up the Madrid-based company’s finances, said the people, who asked not to be identified because the negotiations are private. The securities typically pay a higher coupon than cash-only bonds to compensate for their low place in a company’s capital structure and the possibility issuers can pay interest with debt.
Prisa owed about 3.4 billion euros ($4.6 billion) at the end of June, according to a filing. The company is considering paying down the PIK by selling assets, including its pay-TV business and a 17.3 percent stake in Mediaset Espana Comunicacion SA (TL5), said one of the people. No final decision has been made because negotiations are continuing, the person said.
An official for Prisa in Madrid, who asked not to be identified citing company policy, declined to comment.
Prisa said in June it had support from lenders holding 72.9 percent of its debt. The owner of El Pais newspaper said at the time it also got a credit facility from banks for as much as 80 million euros.