WarnerMedia parent AT&T is raising $12.5 billion in its second bond sale in a week that it will use to retire outstanding debt, the company said in an SEC filing Friday.
It’s selling five tranches of global notes for, respectively, $1.5 billion, $2.5 billion (two tranches) and $3 billion (two tranches) due starting in 2027 through 2060.
AT&T intends to use the proceeds for the early redemption or repayment of the outstanding debt, and to pay related premiums, accrued interest and fees and expenses associated with such redemption or repayment, it said, referring to four outstanding tranches of global notes and outstanding principal amounts on two term loans — many of which would mature or come due later this year or next.
The highly leveraged telco giant, which is prepping streaming service HBO Max for launch next week, recently raised €3 billion (about $3.28 billion) in a note sale and will use the cash for general corporate purposes, which may include debt repayments. In April, the company announced it had set up a new $5.5 billion loan agreement at competitive rates with 12 banks to provide it with additional financial flexibility. The loans are pre-payable without penalty, it said, as it seeks to reassure the markets and employees it’s on solid ground in uncertain COVID-19 times.
AT&T’s debt ballooned with its acquisition of Time Warner in 2018 for $85 billion. Debt stood at $150 billion at the end of 2019.
Media companies have been active in the bond market, most recently raising cash to refinance debt. Discovery, Inc. said Thursday it’s closed on a planned debt refinancing ahead of schedule, using $1.5 billion out of $2 billion it recently raised in a bond sale to pay down old debt. Earlier this week, Comcast raised $4 billion in a bond sale, earmarking all of it to refinance existing debt.
Businesses that can have been raising cash rapidly in recent month to build a cushion against the business devastation of coronavirus. In some cases, like exhibitor AMC Entertainment, the liquidity was needed to keep the lights on. In other cases like Disney and Comcast, building up a bit of a war chest was considered prudent given the lack of operational visibility. Pushing debt obligations farther into the future — and with lower interest rates if possible — is another form of commonly used balance sheet protection and can give companies some breathing room.
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