Cablevision Said Offering $2.3 Billion Acquisition Loan

  • Spread seen to be less than market average for August
  • Bonds extend slide that began with Altice takeover news

Cablevision Systems Corp. has begun marketing the first piece of debt financing for its $17.7 billion purchase by Altice NV.

The company is offering investors a $2.3 billion term loan at 3.5 percentage points more than the London interbank offered rate, with a 4.5 percent minimum rate, according to a person with knowledge of the deal. That compares with an average spread of about 3.9 percentage points for first-lien loans issued in August, according to data compiled by Bloomberg.

Cablevision’s bonds tanked last week as holders signaled concern they were about to be buried in debt as a result of the acquisition, which isn’t expected to be completed until next year. JPMorgan Chase & Co., BNP Paribas SA and Barclays Plc are arranging the acquisition loan, the person said.

Lisa Anselmo, a spokeswoman for Cablevision, declined to comment.

Billionaire Patrick Drahi’s Altice said Sept. 17 that it has agreed to buy the Bethpage, New York-based company. The acquisition is expected to be completed in first half of next year, according to the statement.

Cablevision will have to raise $8.6 billion in debt, of which $2.5 billion will be used for refinancing and $6.1 billion will be incremental, according to a research note last week from KDP Investment Advisors Inc. That will push leverage to about 8 times a measure of earnings, KDP analyst Spencer Godfrey said.

Regulators including the Federal Reserve said in lending guidance issued in 2013 that a debt level of more than 6 times a measure of earnings raises concern.

Buyers of Cablevision’s senior secured term loan would be in a less risky position than bondholders.

Secured leverage at the U.S. cable provider will be anywhere from 1.5 times to a little more than 2 times, depending how much credit investors give to savings resulting from the merger, according to two people with knowledge of the financing, who asked not to be identified because the details aren’t public.

Cablevision’s unsecured bonds have continued to drop since the Altice deal was announced.

The company’s $750 million of notes due in 2024 fell to 82.375 cents on the dollar at 3:10 p.m. to yield 8.1 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. They’ve tumbled from as high as 105 cents in April.

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