AMERICA’S billionaire Dolan family are planning to raise $4.25 billion (£2.33 billion) of high-yield debt to finance their bid to take Cablevision private, marking the largest issue of so-called junk bonds in 16 years.
The bond sale is part of a $7 billion debt issue that the family will use to finance their $7.9 billion offer to buy out Cablevision, which Charles Dolan, the family patriarch, founded more than 30 years ago.
The junk bond transaction would be the largest since 1989 when RJR Nabisco raised $8.5 billion in high-yield debt.
The financing also involves a loan of about $1.7 billion which, coupled with Cablevision’s existing borrowings, would leave the private company with debt of about $12.5 billion. Dolans are being advised by Merrill Lynch and Bank of America, which have agreed to finance the cash part of the deal.
Cablevision shares added another 2 per cent following Monday’s 20 per cent gain as analysts continued to speculate that a rival bidder may emerge for the company, which boasts three milllion customers.
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“We continue to believe [Cablevision] is worth $35-$40 a share to a strategic buyer such as Time Warner or Comcast,” Rich Greenfield, an analyst at Fulcrum Global Partners in New York, said. “It almost feels like Chuck Dolan is simply attempting to take CVC private so he can capture 100 per cent of the sale premium to Time Warner or Comcast in 12 months, rather than the upside from his current 24 per cent ownership.”