Citigroup Global Markets and Lehman Brothers have committed $10 billion in unsecured credit facilities to back Cox Enterprises' $7.9 billion proposed acquisition of the 38% publicly-held portion of Cox Communications. Citi and Lehman officials and Richard Jacobson, v.p. and treasurer of Cox Enterprises, did not return calls.
Cox Enterprises currently has a 62% interest in Cox Communications. Citi and Lehman will each provide 50% of the financing and will be credited as the exclusive joint bookrunners, according to the commitment letter filed with the Securities and Exchange Commission. Latham & Watkins will be counsel for the banks.
The new facilities will also replace Cox Enterprise's existing $1.1 billion revolver and Cox Communications' $1.25 billion revolver. The $1.1 billion line is led by J.P. Morgan and Wachovia Securities with Citigroup, SunTrust Bank, The Royal Bank of Scotland and Banc of America Securities playing a role. The $1.25 billion revolver is led by Citigroup, SunTrust, B of A, Wachovia and J.P. Morgan.
Standard & Poor's has placed Cox Enterprises' BBB corporate credit rating on watch. If the transaction goes through as planned the senior unsecured debt would be downgraded to BBB- or BB+, the agency adds, with leverage increasing from three to five times.