News - 29/07/2016

Warner raises $300m from the sale of senior notes

Warner raises $300m from the sale of senior notes

Warner Music Group sold senior secured notes and raised $300m; this way it aims to pay off a chunk of its four-year-old term loan debt - WMG’s term loan was taken out in 2012, and reached a high point of $1.31bn after it used debt money to buy Parlophone Label Group in 2013.

At the end of its last announced fiscal quarter (end of March 2016), this chunk of debt had reached $1.27bn.

Warner’s total long-term debt at this juncture stood at $2.89bn. By issuing a bond offering of $300m of senior secured notes, the company has now been able to pay down $295.5m of the term loan, bringing it under $1bn – down to around $980m.

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Wells Fargo and Credit Suisse have been appointed as back office / administrative partners for the new senior secured notes.

The main advantage to Warner of swapping one form of debt (term loan) for another (senior notes) is certainty: the senior notes are set at a fixed rate of interest (in this case, until 2023), while the long-term term loan moves with the market on a floating rate.

 

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