Subsequent Event

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On August 7, 2020, the Company entered into an agreement with Vertical Bridge REIT, LLC (“Buyer”), for the sale of substantially all of the Company's broadcast communications tower sites and certain other related assets for approximately $213 million.

The transaction may occur in one or more closings. Simultaneous with each closing, the Company would enter into lease agreements for the continued use of certain of the towers. The Company will not enter into lease agreements for certain other assets being sold, including excess land and certain intangible rights. The initial term of each lease will be ten (10) years followed by five (5) option periods of five (5) years each, subject to exclusions and limitations. If the Buyer acquires all tower sites that are subject to the transaction, we will have annual lease payments of approximately $13.5 million subject to customary escalators, which will be accounted for as a reduction of the financial lease liability and interest expense, a loss of annual tenant revenues of approximately $2.3 million and an approximate $2.3 million annual reduction of operating expenses of which $1.5 million is non-cash intangible amortization. The Company will also record non-cash imputed rental income for certain tower sites where the Company will continue to use a portion of the tower along with other existing and future tenants. The transaction will not have any effect on the Company’s current broadcast operations.

The first closing of the transaction is expected to occur in the fourth quarter of 2020 following a 45-day diligence period, during which the Buyer and/or the Company may exclude certain sites from the transaction based upon customary grounds for exclusion. Notwithstanding the foregoing and subject to satisfaction of customary closing conditions, the Buyer is required to acquire at least 85% of the tower sites (based on value and irrespective of any defects identified with respect to such tower sites during the diligence period), and the Company is not required to consummate the transaction unless the Buyer agrees to acquire at least 92.5% of the tower sites (based on value) at the first closing. Subsequent closings will occur as and to the extent defects are cured with respect to any excluded tower sites.

The Company expects that the net proceeds of the sale related to assets that are not being leased would be used to pay down debt on a pro rata basis between the Term Loan due 2026 and the 6.75% Senior Notes, subject to a 12-month reinvestment right. The Company expects that the net proceeds of the sale related to assets that are being leased would be applied to pay down the Term Loan due 2026 and the 6.75% Senior Notes on a pro rata basis.