Earlier this week, the company raised the $2 billion in fresh cash by selling two $1-billion tranches of senior notes due in 2030 and 2050. With the infusion, it launched a $1.5 billion tender offer for several series of outstanding senior notes and announced the results today in an SEC filing. The debt that Discovery is extinguishing came due in 2022 and 2023 – meaning the tender operation and new debt raise has moved some maturities and corresponding financial obligations much farther into the future.
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It intends to use the remaining $500 proceeds for general corporate purposes, which may include additional repayment and refinancing of other debt, working capital and capital expenditures.
Comcast did something similar yesterday, raising $4 billion in a bond sale and earmarking all of to refinance existing debt that comes due later. In both cases, the cash raised by bond sales was specificically earmarked to refinance.
Media companies 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 obgliations farther into the future — and with lower interest rates if possible — is another form of balance sheet protection that companies seem to be increasingly turning to in recent weeks.
In late March, Discovery tapped $500 million of a $2.5 billion revolving credit facility – another way to access cash. This is the first time the company ha tapped the debt market since the crisis.
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