WarnerMedia owner AT&T on Tuesday said it has struck a deal for a $5.5 billion loan, boosting its liquidity amid the coronavirus crisis.
It also said it expects to be “sizing our operations to economic activity,” a sign of possible layoffs or reduced investment amid the crisis.
AT&T vowed it would continue paying dividends, saying: “As it has for the past 36 years, the company looks forward to continuing to pay a quarterly dividend to shareholders.” Analysts have in recent weeks wondered whether the dividends could be put on ice or reduced amid the virus crisis.
And it touted the “strength and relevance of our core subscription businesses.”
Later on Tuesday, AT&T also unveiled that it would hold its annual shareholder meeting on April 24 in webcast form. “In light of the COVID-19 pandemic, AT&T will hold its 2020 annual meeting of stockholders via webcast rather than an in-person meeting,” it said.
The new so-called term loan credit agreement was struck with Bank of America as agent, with AT&T saying it would use the proceeds for “general corporate purposes.” A term loan is a loan from a bank for a specific amount that has a specified repayment schedule and either a fixed or floating interest rate.
The telecom giant, which has the highest debt load among non-financial U.S. companies, was previously reported to be looking at possible short-term financing deals, as other such options have become more expensive in the current environment.
In a regulatory filing, the company said that “the entire principal amount of the term loan will be due and payable on December 31, 2020.” The loan was struck “at competitive rates with 12 banks to provide additional financial flexibility to an already strong cash position,” AT&T also said in a statement. “The loans are pre-payable without penalty.”
AT&T, led by chairman and CEO Randall Stephenson, last month canceled a $4 billion accelerated share buyback deal to boost its financial flexibility at a time when financial markets have been hit hard by the new coronavirus pandemic.
“As countries and companies around the world respond to the COVID-19 pandemic, AT&T wanted to provide a financial update to investors,” the company said Tuesday. “The strength and relevance of our core subscription businesses, our continued execution on our business transformation initiatives, and sizing our operations to economic activity will provide cash from operations that will support network investments, dividend payments and debt retirement, as well as the ability to invest in business opportunities that arise as the economies recover.”
AT&T also predicted to get “about $2 billion from the expected closing later in 2020 from the previously announced divestiture of CME, as well as additional proceeds from a number of other real estate and tower monetizations.”
Overall, company said it “has a strong cash position, including a strong balance sheet and attractive liquidity.”