Charter Communications has priced US$1.7bn in senior secured notes to refinance existing debt and/or help fund its acquisition of Time Warner Cable. The latter alternative could involve funding a portion of the incremental cash proceeds to TWC stockholders, if they decide to elect to receive US$115 per share in cash rather than US$100 per share.
Charter Communications (NASDAQ:CHTR) has priced US$1.7bn in senior secured notes to refinance existing debt and/or help fund its acquisition of Time Warner Cable (NYSE:TWC).
The US cableco said in a statement that notes will bear interest at 5.875% per annum and be issued at 100% of the principal amount.
The Stamford, Connecticut-based company expects to close the transaction on 19 February subject to customary closing conditions.
Charter said yesterday that it initially intends to hold the proceeds as cash and cash equivalents, and pay down borrowings under its revolver. They will then be used to repurchase or redeem certain outstanding 7% senior notes due 2019 and 7.35% senior notes due 2020, and/or for general corporate purposes. The latter alternative could involve funding a portion of the incremental cash proceeds to TWC stockholders, if they decide to elect to receive US$115 per share in cash rather than US$100 per share.
Assigning the bonds a B1 rating yesterday, Moody’s said the transaction would be leverage neutral under both scenarios. The ratings agency has had all of the John Malone-backed company’s debt ratings on review for upgrade since it agreed to buy TWC and Bright House, for US$65bn and US$10.4bn respectively in late May. If approved by regulators, the deal would create the country’s second largest cableco behind Comcast.
Charter today reported a net loss for Q4 2015 of US$122m, more than double the US$48m loss it reported a year earlier. The company said the 2015 result was driven by US$231m of interest expenses related to the financing of its TWC and Bright House takeovers.
Revenues for the quarter were up 6.4% year-on-year to US$2.5bn, while adjusted EBITDA grew 7.5% year-on-year to US$908m.
