Comcast prepares Funding for 21st Century Fox buy

0
© Reuters. A company flag flutters over Fox Studios in Los Angeles© Reuters. A company flag flutters over Fox Studios in Los Angeles

By Eleanor Duncan

NEW YORK (IFR) – Comcast (NASDAQ:) says it has “Highly Confident Letters” from Bank of America Merrill Lynch (NYSE:) and Wells Fargo (NYSE:) for its US$65bn 21st Century Fox bid.

A “Highly Confident Letter” is a note from an investment banking firm that says the firm is highly confident it will be able to arrange the financing for a securities deal.

Comcast’s competing bid for 21st Century Fox is the largest all-cash deal of all-time, surpassing Bayer’s US$64bn merger with Monsanto (NYSE:), according to Thomson Reuters Deal Insight data.

Comcast said its all-cash proposal is not subject to a financing condition.

It is proposing to acquire 100% of outstanding shares of 21st Century Fox for US$35.00 per share in cash.

It also said it would reimburse the US$1.525bn break-up fee paid to 21st Century Fox by Disney for a total cost to Comcast of US$4.025bn in the “highly unlikely” scenario that Comcast’s transaction does not close.

The deal will take Comcast’s net leverage to above four times, according to executives speaking on a conference call Wednesday.

That number would include the leverage incurred from Comcast’s acquisition of Sky, which the US media company is also hoping to buy.

One analyst on the call expressed surprise at the proposed increase in leverage, noting the company has been “historically conservative on the leverage front”.

Comcast executives said they plan to cut net leverage by half a turn each year with free cash flow to arrive at 2.2x.

“We are very focused on getting our leverage back down,” one Comcast executive said.

The company is expecting to maintain its investment-grade rating.

Moody’s has warned it may cut Comcast’s A3 rating, citing concerns about higher debt levels, especially in light of Comcast’s simultaneous US$30bn all cash bid for Sky.

S&P and Fitch both have A- ratings on Comcast.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

LEAVE A REPLY

Please enter your comment!
Please enter your name here