Charter Communications has closed the US$2.5bn note offering which completes the financing for its acquisitions of Time Warner Cable and Bright House Networks.
Charter Communications (NASDAQ:CHTR) has closed the US$2.5bn note offering which completes the financing for its acquisitions of Time Warner Cable (NYSE:TWC) and Bright House Networks.
The senior unsecured notes due 2026 bear interest of 5.75% per annum and were issued at par, the US cableco said in a statement.
The proceeds will remain in escrow at subsidiary CCOH Safari, created to pre-fund the purchases, alongside funds generated from earlier acquisition financings until the TWC deal closes. At this point, Charter units CCO Holdings and CCO Holdings capital will assume the notes.
In August Charter inked two loans totalling US$3.8bn following a mammoth six tranche US$15.5bn high-yield note issue in July.
Goldman Sachs, BofA Merrill Lynch, Credit Suisse, Deutsche Bank and UBS have been working on the financing for Charter.
The John Malone-backed cableco agreed to buy TWC and Bright House for US$56bn and US$10.4bn respectively in late May. If approved by regulators, the deal will create the country’s second largest cableco behind Comcast. Charter and TWC do not expect federal regulators to finish their review until Q1 2016.
Earlier this month, Fitch rated the then-prospective notes BB, saying it views both acquisitions positively and believes they will strengthen Charter’s credit profile. The ratings agency anticipates that the cableco’s leverage, pro forma for both deals, will be under 5x at closing. However, it described integration risks as “elevated”, adding that Charter’s ability to manage the integration process with minimum disruption to overall operations will be key to the success of the acquisitions.
Fitch considers Charter’s overall liquidity position and financial flexibility to be satisfactory and that the latter will improve in line with free cash flow.