DirecTV raising $3.1bn in junk bonds

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DirecTV is raising $3.1 billion (€2.6bn) of so-called ‘junk bonds’ (Senior Secured Notes) to help in its split from AT&T, according to an announcement from AT&T.

The offer is for a 6-year period and the bonds will be priced on July 22nd and will come from DirecTV Entertainment Holdings.

The cash will be used to finance existing debt and obligations to AT&T and AT&T’s other pay-TV divisions now part of DirecTV’s new relationship with private equity firm TPG. TPG now owns 30 per cent of DirecTV.

The bonds will pay a higher yield than would be usual.

“The Issuers intend to use the net proceeds of the issuance of the Notes, together with the net proceeds from the new credit facility, to pay down, in cash, intracompany indebtedness owed to AT&T and to pay or fund the reimbursement of certain financing expenses and shared transaction expenses, in connection with the anticipated completion of the Separation Transaction [which is the splitting off of the new DirecTV entity].”

Credit Suisse Group AG, Bank of America Corp., Deutsche Bank AG, HSBC Holdings Plc, Bank of Montreal, Goldman Sachs Group Inc., Mizuho Financial Group Inc., Mitsubishi UFJ Financial Group Inc., UBS Group AG, Barclays Plc and Jefferies Financial Group Inc. are leading the bond sale, says Bloomberg.


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