Comcast opted for a new $12.825 billion credit facility with a $7 billion bridge loan to fund its acquisition of AT&T Broadband and will seek a public debt offering or asset sale to secure permanent financing at an opportune time. The company had two options to obtain the necessary financing, said Ken Mikalauskas, v.p. of finance at Comcast. It could secure a bridge loan or go to the public markets to raise the funds. "[The bridge loan] gives us the flexibility to access the capital markets at the right time for our permanent financing," explained Mikalauskas. New financing will be approximately the same size, he noted, and could include a sale of Comcast's 25% stake in Time Warner Entertainment.
Comcast was able to secure a $7 billion, 364-day bridge loan, $2.645 billion, five-year revolver, and $3.18 billion, two-year term loan through strong bank relationships, Mikalauskas said. The company has also amended its former $4.5 billion revolver so money will continue to be available despite the new financing. The ammended credit is a $4.2 billion deal includes a $2.25 billion, five-year revolver, maturing in August 2005, and a $1.95 billion, 364-day tranche, maturing May 8, 2003. "If the merger doesn't close then we are left with our old money," said Mikalauskas. The company believes that the transaction will close during the forth quarter beginning Oct. 1. Currently, Mikalauskas said, everything is on track. "I don't see any reason why we can't close in the fourth quarter," he added.
J.P. Morgan and Citibank won the lead roles on the deal with Citibank edging out incumbent Bank of America for the top spot. Mikalauskas would not comment on how the leads were chosen, but noted that it was a competitive process. B of A, Merrill Lynch, and Morgan Stanley are co-arrangers and the syndicate includes 14 banks who committed $300 - $500 million each. J.P. Morgan and B of A led the former $4.5 billion credit and Barclays Capital, Deutsche Bank and Credit Suisse First Boston held major roles. All the banks cross-participated to varying degrees in the new facilities, said Mikalauskas.