Some favorable windows in the credit markets are easier to spot than others, but when three US network operators look to squeeze through on the same day it's not too difficult. Windstream, tw telecom, and Level 3 Communications each announced substantial balance sheet maneuvers today.
Windstream kicked off a tender offer this morning for its 7.0% notes due 2019, and simultaneously announced a private offering of 7.75% notes due 2021. Both are for $500M, as Windstream looks to push out a piece of its debt for another two years. The effective rate will apparently be a bit higher on the new debt even after the issuance price of 103.5% of par, but they'll also be eliminating all the restrictive covenants.
For its part, tw telecom is tendering for $400M of its 8.0% senior notes due 2018 while looking to sell $800M in two parts, half being senior notes due in 2022 and the other half being more senior notes due in 2023. While I'd love to speculate that the extra $400M indicates they're about to buy something, most is simply going to replace the $196M in cash they used to buy back their convertible debt last quarter and power the renewed $500M stock buyback program they announced last week.
And Level 3 took a quick swipe of the axe to the interest on its Tranche B 2019 Term Loan with another refinancing that was announced after the markets closed. The maturity will remain at August 1, 2019, and the pricing will be at par, but the interest rate will come down from LIBOR+3.75% with a minimum LIBOR of 1.5% to LIBOR+3.00% with a minimum LIBOR of 1.0%. That will save them $10M in cash interest expense annually going forward, but will add a one time $0.04 per share expense to Q3 earnings.
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