Business Context and Reporting Period
This Form 8-K Current Report was filed by Altice USA, Inc. on February 8, 2019, regarding events occurring on February 7, 2019. The filing details significant capital structure refinancing activities undertaken by the company and its indirect wholly-owned subsidiary, CSC Holdings, LLC.
Key Financial Metrics and Transactions
- Incremental Term Loans: Entered into an Eighth Amendment to Credit Agreement for new Incremental Term Loan Commitments totaling $1,000 million.
- Loan Terms: Maturity date of April 15, 2027; issued with a 100bps original issue discount. Interest rates are Adjusted LIBO + 3.00% or Alternate Base Rate + 2.00%.
- Senior Notes Offering: Priced an offering of $250 million in aggregate principal amount of 6.500% Senior Guaranteed Notes due 2029.
- Debt Redemption: Proceeds from the Incremental Term Loans are designated to redeem $894.7 million of 10.125% Senior Notes due 2023.
- Cost of Debt: Expected reduction in average cost of debt from 6.2% to 6.0%.
- Interest Savings: Anticipated total annual interest cost savings of approximately $40 million.
- Debt Maturity Profile: Weighted average life of debt extended from 6.7 years to 6.9 years (as of September 30, 2018).
Material Changes Versus Prior Period
The filing does not provide comparative financial performance metrics (revenue, profit, cash flow) for a prior period. The material changes reported are structural refinancing actions:
- Replacement of higher-cost senior notes (10.125%) with lower-cost term loans.
- Extension of the weighted average life of the company's debt portfolio.
- Reduction of outstanding borrowings under the revolving credit facility using proceeds from the new Senior Notes offering.
Guidance, Outlook, and Risks
Management Commentary: Management expects the refinancing to result in significant annual interest savings and an improved cost of debt profile. The proceeds from the new notes are intended to repay revolving credit facility borrowings, while the term loan proceeds fund the redemption of the 2023 Senior Notes and increase cash on the balance sheet.
Risks and Contingencies: The filing includes a standard disclaimer regarding forward-looking statements. Actual results may differ due to economic, business, competitive, and regulatory factors. The new notes are sold in a private placement to qualified institutional buyers and non-U.S. persons and are not registered under the Securities Act.
Investor Verification Checklist
- Verify the closing of the $250 million Senior Notes offering and the $1,000 million Incremental Term Loans.
- Confirm the successful redemption of the $894.7 million 10.125% Senior Notes due 2023.
- Monitor the actual reduction in the weighted average cost of debt to ensure it aligns with the projected 6.0% target.
- Review the impact of the 100bps original issue discount on the effective interest rate of the new term loans.
- Check subsequent filings for the final use of proceeds and any changes to the revolving credit facility balance.