Mediacom Tenders Debt Deals

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Mediacom Communications, coming off strong second-quarter results, is conducting a tender offer for about $625 million in bonds, financed through a bank loan and a new debt issuance valued at about $650 million.

Mediacom has initiated a tender offer for $500 million in 9.5% senior notes due 2013 and $125 million in 7.875% notes due 2011. The deals are being financed through two separate items -- a $300 million term loan due 2017 and a $350 million 9.125% senior note offering due 2019. Mediacom is offering a slight premium to its existing 9.5% bondholders -- it has proposed a payment of $1,002.50 for every $1,000 principal amount in 9.5% bonds held, according to Securities and Exchange Commission documents. The MSO is offering face value for the 7.875% notes.

The deals will allow Mediacom to eliminate the refinancing risk it faced in 2011 and 2013 by pushing out maturities to 2017 and 2019 as it replaces the existing notes with lower cost debt -- the blend of the 9.125% coupon debt and the new bank debt is lower than the blend of the notes that are being taken out.
Mediacom has retained Wells Fargo and Citigroup as dealer managers for the tender offers, which will expire on Sept. 8.

According to Standard & Poor's LCD News, Mediacom increased the loan amount from $250 million to $300 million "amid strong demand for the credit."

Mediacom increased free cash flow by five times in the second quarter to $31.1 million, and increased its full-year guidance on the metric.

This is the second sizeable debt deal in the cable and satellite space this week. On Wednesday, Dish Network proposed a $1 billion debt offering that it said would be used for general corporate purposes. Dish sold the 7.875% notes due 2019 later on Aug. 12, according to Bloomberg News.

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