UPDATED with details from debt filing. Disney has raised $11 billion in debt in an effort to bolster its financial position. The financial details were disclosed Tuesday morning in an SEC filing.
Interest rates for the six-part raise range from 1.75% to 3.8%.
PREVIOUSLY: Walt Disney Co. filed a prospectus Monday with the SEC to offer multiple tranches of senior notes maturing between 2026 and 2060 to raise fresh cash. The amount, not specified yet, will be announced later but is likely to be quite large. Companies often file plans to sell notes with the ultimate amount dependent on investor enthusiasm and interest rates.
Moody’s Investor Service said in a note today the cash will likely be used to pay down outstanding debt as it matures. It said Disney’s current debt maturities at the end of the March quarter were about $12.7 billion over the next twelve months.
“We believe that the cash on hand and bank facilities will be more than adequate to meet all the company’s needs at this time and this transaction will only further bolster the company’s solid liquidity position which is important financial insurance since the crisis duration and economic knock-on effects are still unknown,” said Moody’s analyst Neil Begley.
“This transaction will add to Disney’s significant liquidity as it will free up revolving debt capacity otherwise assumed set aside to back outstanding commercial paper and near-term maturities, and essentially removes any question that the company has robust liquidity to help carry it through this ‘black swan’ cycle caused by the spread of COVID-19,” he added.
The company has a total of $17.25 billion of revolving loan capacity which is still undrawn except to backstop its outstanding commercial paper. In other words, using the funds it will be raising now to do that instead leaves the revolver untouched.
Disney also has a sizable cash balance of about $14.3 billion at the end of the fiscal second quarter in March.
Moody’s assigned an A2 rating to the proposed offering, the low end of a top long-term rating for commercial paper.