Viacom today announced it was selling $750 million in senior debt due in 2014 and 2019 and will use the proceeds to make an offer for debt it currently holds that is due in 2011.
Holders of the 2011 debt, which has a 5.75% coupon, have until August 27 to decide whether to except the offer, which includes accrued and unpaid interest.
With over $7 billion of debt on Viacom’s balance sheet and a relatively modest leverage ratio of under 3 times this is not a major re-financing, just a cleaning of its balance sheet to limit any large principal debt payments due in the next few years.
If holders of the 2011 notes accept the offer, the company will still have about $750 million due during that year. Of course there has been some demand in the debt markets the past few months (both Sirius and Warner Music Group succesfully issued new debt) so there could be more sales down the road or this offering could even be increased if there is enough demand.
Viacom’s advertising driven business has struggled during the recession. Q2 ’09 EBITDA decreased 21% at the company. Ad revenue in the US declined 9% in Q1 ’09 and 6% in Q2 ’09.
Sumner Redstone had his own personal debt problems in late 2008, but those have largely been dealt with and this sale is not related to any balance sheet issues at holding company National Amusements.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.