Mediacom Communications completed about $1.4 billion in refinancing transactions last week, moves that provide the company with more than $600 million in available cash and credit lines and push out maturities until 2022.
According to Mediacom, the deals were completed in three tranches: a $375 million revolving credit facility due November 2022; a $250 million Term A-1 loan expiring in November 2022; and an $800 million Term Loan M expiring in January 2025.
Mediacom had originally planned to raise $600 million through the Term M loan, but the oversubscribed transaction allowed for the increase to $800 million.
As a result of this transaction and a similar one completed earlier this year, Mediacom has refinanced both of its bank credit facilities, at a total of about $2.8 billion; has no meaningful debt maturities until 2021 (a separate $200 million in bond debt); and will have over $600 million of cash on hand and unused lines under its revolving credit facilities.
Concurrent with the launch of the transaction, Moody’s upgraded Mediacom’s corporate family rating to Ba2 from Ba3, which is a step closer to investment grade and maintained its positive outlook on the company, which implies another ratings upgrade could come in the next 12-18 months.
In a statement concerning the upgrade, Moody’s said Mediacom has consistently paid down debt, lowering its leverage ratio from a peak of 6.8 times cash flow in 2011 after a leveraged buyout that took the company private, to about 3.8 times cash flow today.
“Since then, management has consistently plowed more than 80% of its free cash flow toward debt-repayment, reducing its obligations by nearly $1 billion or 30%,” Moody’s wrote, adding that absent a material event, it expects leverage to fall near 3 times or less by the end of 2018.
In a statement, Mediacom founder, chairman and CEO Rocco Commisso said with the new refinancings and the credit upgrade from Moody’s, the company “has never been in a better financial position.”
The transactions were conducted by Mediacom’s long-standing bank group, consisting of about a dozen lenders and led by J.P. Morgan. In a statement, J.P. Morgan Managing Director of Leveraged Finance Capital Markets Lenny Carey said the deal was “a real testament to the credibility Rocco and team have built up in the credit markets.”