Charter Said to Boost Time Warner Bond Deal to $15.5 Billion

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Charter Communications Inc. boosted to $15.5 billion from $15 billion a bond offering that partially funds the company’s takeover of Time Warner Cable Inc., according to a person with knowledge of the discussions.

The operating unit of the fourth-biggest U.S. cable company may issue the debt in six parts as soon as Thursday. The longest portion will be $500 million in 40-year bonds that offers a yield of 3.7 percentage points more than similar-maturity Treasuries, said the person, who asked not to be identified because the information isn’t public.

Moody’s Investors Service gave the proposed debt a junk rating of Ba1. Standard & Poor’s assigned the securities an investment-grade ranking of BBB- and Fitch Ratings said it expects to do the same.

“It’s a pretty aggressive package,” said Chris Ucko, a New York-based analyst at CreditSights Inc. “Originally the market was expecting maybe $6 to $8 billion, but Charter is coming with much more than anticipated and is trying to extend it out much longer than expected.”

The second-longest part of the offering is $3.5 billion of 30-year bonds with a proposed yield of 3.35 percentage points more than government debt. That’s 1.01 percentage points more than the average yield on bonds of similar maturity and ratings, according to Bank of America Merrill Lynch indexes.

Justin Venech, a spokesman for Stamford, Connecticut-based Charter, declined to comment.

Cable Consolidation

Charter is buying Time Warner Cable in a deal that valued the New York-based business at $78.7 billion, including debt. The acquisition is expected to be completed by the end of the year, according to a May 26 statement. The combined business will have about 17 million basic cable customers, second to Comcast Corp.’s 22 million.

Goldman Sachs Group Inc., Bank of America Inc. and Credit Suisse Group AG are arranging the debt sale.

The company has received financing commitments in excess of $31 billion, which includes loans, to fund the purchase.

To help pay for the deal, John Malone’s Liberty Broadband Corp., will buy $5 billion of new Charter stock. Charter said in a regulatory filing that as much as $27.3 billion of new debt may be needed for the Time Warner Cable purchase and for the takeover of Bright House Networks, a smaller company that the cable operator had previously agreed to buy.

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