Subsequent Events

Raycom Merger

Stations acquired and divested

. On

January 2, 2019,

we completed the Raycom Merger for an adjusted purchase price of approximately

$3.66

billion plus transaction related expenses. Upon completion of the transaction we acquired television stations in

television markets as well as various production operations and general and administrative offices.

As described in Note

“Acquisitions and Divestitures” above, to facilitate regulatory approval of the Raycom Merger on

December 31, 2018,

we sold the assets of WSWG-TV (DMA-

154

) in the Albany, Georgia television market. Also to facilitate regulatory approval of the Raycom Merger, on

January 2, 2019,

we sold the assets of the following television stations in

eight

markets that we acquired in the Raycom Merger (dollars in millions):

	Total
	Cash		Television
Purchaser	Consideration		Station	Location	DMA

Lockwood Broadcasting, Inc.	$	67.0	WTNZ-TV	Knoxville, TN		61
			WFXG-TV	Augusta, GA		112
			WPGX-TV	Panama City, FL		151
			WDFX-TV	Dothan, AL		173

Scripps Media, Inc.	$	55.0	KXXV-TV	Waco-Temple-Bryan, TX		86
			KRHD-CD	Waco-Temple-Bryan, TX		86
			WTXL-TV	Tallahassee, FL		108

TEGNA, Inc.	$	105.0	WTOL-TV	Toledo, OH		78
			KWES-TV	Odessa - Midland, TX		144
Total	$	227.0

The net consideration to complete the Raycom Merger consisted of

$2.84

billion of cash,

11.5

million shares of our common stock, valued at

$169.5

million and

$650.0

million of a new series of preferred stock, for a total of

$3.66

billion.

Due to the proximity of the closing dates of the Raycom Merger to the the filing date of this annual report, we are unable to present a preliminary purchase price allocation for the acquired businesses. Fair value estimates of assets acquired, liabilities assumed and resulting goodwill will be based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and liabilities assumed, the fair value estimates will be based on, among other factors, expected future revenue and cash flows, expected future growth rates, and estimated discount rates.

Debt Financing Transactions

January 2, 2019,

we entered into a Fourth Amended and Restated Credit Agreement (the

“2019

Senior Credit Facility”). The

2019

Senior Credit Facility provides total commitments and outstanding loans of

$2.2

billion, consisting of a

$1.4

billion term loan facility (the

“2019

Term Loan”), a

$595.0

million outstanding principal balance under the existing

2017

Term Loan and a

$200.0

million revolving credit facility (the

“2019

Revolving Credit Facility”).

Borrowings under the

2019

Term Loan bear interest, at our option, at either the London Interbank Offered Rate (“LIBOR”) or the Base Rate (as defined below), in each case, plus an applicable margin. The applicable margin is

2.5%

for LIBOR borrowings and

1.5%

for Base Rate borrowings. As of

February 22, 2019,

the interest rate on the balance outstanding under the

2019

Term Loan was

5.0%.

Borrowings under the

2019

Revolving Credit Facility currently bear interest, at our option, at either LIBOR plus

2.50%

or Base Rate plus

1.50%,

in each case based on a

first

lien leverage ratio test as set forth in the

2019

Senior Credit Facility (the “First Lien Leverage Ratio”). Base Rate is defined as the greatest of (i) the administrative agent’s prime rate, (ii) the overnight federal funds rate plus

0.50%

and (iii) LIBOR plus

1.00%.

We are required to pay a commitment fee on the average daily unused portion of the

2019

Revolving Credit Facility, which rate

may

range from

0.375%

0.50%

on an annual basis, based on the First Lien Leverage Ratio. The

2019

Revolving Credit Facility matures on

January 2, 2024,

and the

2019

Term Loan matures on

January 2, 2026.

As of

December 31, 2018

we incurred

$3.2

million of transaction fees and expenses related to the

2019

Senior Credit Facility. At

December 31, 2018

these were recorded as other long-term assets. In

2019

these were reclassified as a reduction of the balance of the outstanding debt and are amortized over the life of the

2019

Senior Credit Facility. The amortization of these fees will be included in our interest expense. Please refer to Note

“Long Term Debt” for information related to the issuance of the

2027

Notes.

Effective upon the completion of these debt transactions, the aggregate minimum principal maturities of our long-term debt were as follows (in thousands):

	Minimum Principal Maturities
	2019 Senior		2024		2026		2027
Year	Credit Facility		Notes		Notes		Notes		Total
2019	$	14,000	$	-	$	-	$	-	$	14,000
2020		14,000		-		-		-		14,000
2021		14,000		-		-		-		14,000
2022		14,000		-		-		-		14,000
2023		14,000		-		-		-		14,000
Thereafter		1,925,026		525,000		700,000		750,000		3,900,026
Total	$	1,995,026	$	525,000	$	700,000	$	750,000	$	3,970,026

Our obligations under the

2019

Senior Credit Facility are secured by substantially all of our consolidated assets, excluding real estate. In addition, substantially all of our subsidiaries are joint and several guarantors of, and our ownership interests in those subsidiaries are pledged to collateralize, our obligations under the

2019

Senior Credit Facility.

The

2019

Senior Credit Facility contains affirmative and restrictive covenants with which we must comply, including: (a) limitations on additional indebtedness, (b) limitations on liens, (c) limitations on the sale of assets, (d) limitations on guarantees, (e) limitations on investments and acquisitions, (f) limitations on the payment of dividends and share repurchases, (g) limitations on mergers and (h) maintenance of the First Lien Leverage Ratio while any amount is outstanding under the

2019

Revolving Credit Facility, as well as other customary covenants for credit facilities of this type.

Gray Television, Inc. is a holding company, and has

material independent assets or operations. Upon completion of the Raycom Merger financing transactions, the

2024

Notes,

2026

Notes and

2027

Notes are fully and unconditionally guaranteed, on a joint and several, senior unsecured basis, by substantially all of Gray Television, Inc.'s subsidiaries. Any subsidiaries of Gray Television, Inc. that do

not

guarantee the

2024

Notes,

2026

Notes and

2027

Notes are minor. As of

February 22, 2019,

there were

significant restrictions on the ability of Gray Television, Inc.'s subsidiaries to distribute cash to Gray or to the guarantor subsidiaries. The

2024

Notes,

2026

Notes and

2027

Notes include covenants with which we must comply which are typical for borrowing transactions of their nature.

Equity Financing Transactions

. Effective on

January 2, 2019,

we issued

11.5

million shares of our common stock at a price of

$14.74

per share to the certain former shareholders of Raycom Media, Inc. as part of the total consideration paid for the Raycom Merger. We incurred transaction fees and expenses related to the issuance of these shares that will be recorded as a reduction of the balance outstanding of our common stock in our balance sheets.

Effective on

January 2, 2019,

we issued

650,000

shares of Preferred Stock to holders of warrants to purchase shares of Raycom Media, Inc.’s capital stock that were outstanding immediately prior to the Raycom Merger. The Preferred Stock was designated as “Series A Perpetual Preferred Stock” and had a liquidation value of

$1,000

per share. The issuance of the Preferred Stock was issued as partial consideration for the Raycom Merger. Because the Preferred Stock is perpetual and

not

convertible into shares of our common stock or Class A common stock we have recorded the balance outstanding as mezzanine equity. The Preferred Stock accrues dividends at

per annum payable in cash or

8.5%

per annum payable in the form of additional Preferred Stock, at the election of Gray. Cash preferred stock dividends are due quarterly on

January 15,

April 15,

July 15

and

October 15

each year. The holders of the Preferred Stock will

not

be entitled to vote on any matter submitted to the stockholders of the Company for a vote, except as required by Georgia law. Upon a liquidation of the Company, holders of the Preferred Stock will be entitled to receive a liquidation preference equal to

$1,000

per share plus all accrued and unpaid dividends.

United Communications Acquisition

February 8, 2019,

we announced that we have entered into an agreement to acquire WWNY-TV (CBS) and WNYF-CD (FOX) in the Watertown, New York market (DMA

178

) and KEYC-TV (CBS/FOX) in the Mankato, Minnesota market (DMA

199

) from United Communications Corporation for a purchase price of

$45.0

million using cash on hand. We expect to complete this transaction following receipt of regulatory and other approvals in the

second

quarter of

2019.