AT&T is issuing €3 billion ($3.27 billion) in new debt, boosting its liquidity as the novel coronavirus pandemic continues to impact the company’s businesses. In a prospectus, the telecom giant said it will use cash from the offering for general corporate purposes, including the potential to pay down existing debt.
AT&T already has a heavy debt load, holding more than $150 billion in debt at the end of 2019. It entered into a $5.5 billion term loan agreement last month to give it “financial flexibility” amid the pandemic.
The new European debt offering is being sold in three tranches: a €1.75 billion note with 1.6 percent interest due in 2028; a €750 million note with 2.05 percent interest due in 2032; and a €500 million note with 2.6 percent interest due in 2038.
The company’s communications, broadband and enterprise businesses continue to drive revenue (and account for more than 60 percent of AT&T’s total revenue) and incoming CEO John Stankey told analysts on the company’s last earnings call “they also provide a foundation that can absorb pressure from the other parts of the business that are facing headwinds because of COVID-19.” That includes AT&T’s media business. WarnerMedia and DirecTV have been severely impacted by the pandemic, with advertising declines, cord-cutting, shuttered movie theaters and the shutdown of essentially all TV and film productions.
Still, the company said in its last earnings report that paying down debt remains a top priority. “The message we really we want to give to you right now is that we can continue to invest and continue to paying out our debt and continue to pay our dividend all in a very flexible environment,” CEO Randall Stephenson said at the time.
