Five banks last week launched syndication of $21 billion in loans for Time Warner. The media company is using the loans to repurchase more than $12 billion of its shares and to pay down debt of Adelphia Communications Corp., according to a filing with the Securities and Exchange Commission. Comcast Corp. and Time Warner are buying the bankrupt Adelphia for more than $17 billion, including cash and stock.
The deal comprises a five-year, $6 billion revolving credit facility; a five-year, $7 billion credit line; a five-year, $4 billion term loan and a three-year, $4 billion term loan. Pricing on the tranches could not be determined. Banc of America Securities, BNP Paribas, Citigroup, Deutsche Bank and The Royal Bank of Scotland spun the deal out to the market last Wednesday. The deal to acquire Colorado-based Adelphia was agreed upon last April.
The acquisition of Adelphia will result in a new cable provider for seven million households, or roughly 10% of U.S. cable subscribers. In addition to the purchase of Adelphia, Time Warner and Comcast have entered into an agreement to re-align part of their respective customer bases with some subscribers switching providers. As part of the agreement Time Warner will be paying $2 billion to Comcast for a stake Comcast currently holds in Time Warner Cable, further increasing its customer base. The added subscribers gained from the transaction is expected to put Time Warner ahead of its two chief competitors: satellite service provider Direct TV and EchoStar Communications' Dish Network. "This is a pretty impressive [transaction] that they have been able to work out. At the beginning of last year, when this was all being talked about, I would have said that it was far from certain that this deal would actually get done," one investor reflected.
Calls to bankers at Citigroup, B of A, RBS and Deutsche Bank were not returned. A spokesman at Comcast declined comment, as did a spokeswoman at BNP. Spokesmen at Time Warner and Adelphia did not return calls.