The Walt Disney Co. has raised nearly $11 billion in a new debt offering as it continues to deal with the impact of the novel coronavirus pandemic on its worldwide businesses.
The company in a Tuesday regulatory filing disclosed details of its latest return to the debt market via a senior unsecured notes offering. The offering, expected to secure proceeds of $10.91 billion after deducting underwriting costs, will include tranches maturing in 2026, 2028, 2031, 2040, 2051 and 2060.
Disney had on Monday, in a separate filing, issued a supplement to a September prospectus to raise senior notes. The company, led by CEO Bob Chapek, at the time said the net proceeds would be used for general corporate purposes, including the repayment of debt obligations.
In the supplement, the company said the offering was guaranteed by TWDC Enterprises 18 Corp., a Disney subsidiary. And it reiterated that it would use the proceeds to in part repay TWDC Enterprises’ $750 million in senior notes due in June and its floating rate notes due in June, of which $500 million are outstanding.
Moody's Investors Service on Monday assigned an A2 rating to the Disney debt raise. "This transaction will add to Disney's significant liquidity as it will free up revolving debt capacity otherwise assumed set aside to back outstanding commercial paper and near-term maturities, and essentially removes any question that the company has robust liquidity to help carry it through this 'black swan' cycle caused by the spread of COVID-19," analyst Neil Begley said.
Fitch Ratings in its own note assigned an A- rating to Disney's multi-tranche offering, with a negative outlook. "Fitch views the issuance positively as the company bolsters its liquidity position, reduces reliance on commercial paper markets and addresses current maturities," the credit agency said. "Fitch believes Disney has the financial flexibility and capacity to withstand the impact of the coronavirus pandemic."
Disney, which has seen major business divisions hit by the impact of the coronavirus pandemic, also reported that, as of March 28, it had commercial paper borrowings worth $8.48 billion.
Moody's Begley pointed to $17.5 billion in revolving credit facility capacity that is currently undrawn, except to backstop the firm's commercial paper that the latest debt raise is aiming to reduce in value and repay over time. He pointed to Disney having around $14.3 billion in cash on hand as of March 28.