CBS buying back debt


A day after reporting Q1 earnings and having its top execs point to brighter days ahead, CBS Corporation on Friday announced a cash tender for any and all of its 7.7% senior notes coming due next year. There are $1.24 billion of the notes outstanding.

CBS is offering a bonus to bondholders who agree to cash out now. The company will pay $1,035 for each $1,000 face value of the 2010 notes tendered by a deadline of May 15th. Banc of America Securities, Citi and UBS Securities are acting as deal managers.

In Thursday’s quarterly conference call, CBS Corp. CFO Fred Reynolds expressed confidence that the company would be able to deal with all of the debt maturities coming up in the next couple of years. He also noted that the market for corporate financing is finally improving.

To that end, CBS moved to take advantage of the market with a new offering of a half-billion to billion bucks worth of new senior unsecured bonds, likely to be split between five- and ten-year maturities. Moody’s Investors Service has already given them a Baa3 rating.

No sooner said than done. CBS announced late Friday that it had sold a debt offering of $400 million of 8.20% senior notes due 2014 and $350 million of 8.875% senior notes due 2019.

“The bond offering fills a very important hole in the company’s liquidity profile given that it has a large $1.2 billion maturity in 2010, cyclically weakened free cash flow generation, and a year end 2010 maturity of its committed external liquidity source, its bank revolver,” said Moody’s Sr. VP Neil Begley.