Debt Offering Boosts Cablevision Stock
Shares Up More Than 15%
By Mike Farrell -- Multichannel News, 1/8/2009 6:01:00 AM MT
Cablevision stock soared Thursday after a subsidiary announced plans for a debt offering that will remove much of the refinancing pressure on the cable company.
Cablevision shares were up $2.60 each (15.6%) to $19.20 per share in afternoon trading after the company said its wholly owned subsidiary, CSC Holdings, planned a private placement of $500 million in senior notes that will be used in part to pay down some upcoming debt maturities.
The offering, which was expected to price later Thursday, appeared to ease investor concerns about upcoming debt obligations for the cable company. In a research note Jan. 8, Pali Research media analyst Richard Greenfield said that he expected CSC to sell the five-year notes with an interest rate of about 8% to 9% and a yield of 11.25% to 11.5% and estimates that the company will raise about $450 million in the deal, taking into account embedded discounts.
Cablevision has about $1.7 billion in maturities in 2009. Greenfield noted that the company already has about $1.75 billion of debt capacity (including the senior note offering), about $400 million in cash and is generating well over $150 million in cash each quarter.
Greenfield wrote that while the yield on the new bonds is a bit lofty, it shows that Cablevision “has access to capital at prices that while high, are not absurd.”
Bond rating agency Moody’s Investor Service also praised the deal, adding that while Cablevision will probably have to go to the refinancing trough again in the third quarter, “the situation should be much more manageable.”
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