The Walt Disney Company has raised nearly $11 billion in new debt as it continues to battle financial challenges brought on by repercussions of the coronavirus. The news came from regulatory filings on Tuesday made by Disney.
According to the filing, Disney is raising debt via a senior unsecured notes offering. It is expected that this will raise approximately $10.91 billion after deducting underwriting costs and will include tranches maturing in 2026, 2028, 2031, 2040, 2051, and 2060. Interest rates for the six-part raise range from 1.75% to 3.8%.
According to Moody’s, it is expected that this cash will be used to be down debt as it matures
“We believe that the cash on hand and bank facilities will be more than adequate to meet all the company’s needs at this time and this transaction will only further bolster the company’s solid liquidity position which is important financial insurance since the crisis duration and economic knock-on effects are still unknown,” said Moody’s analyst Neil Begley.
“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,” he added.
Moody’s gave an A2 rating to the proposed offering. Fitch Ratings assigned an A- to Disney’s multi-tranche offering along with a negative outlook.
Disney still has $17.25 billion of revolving loan capacity. This is still undrawn except to backstop its outstanding commercial paper. The company also has $14.3 billion at the end of the fiscal second quarter in March.
*updated to billion, not million.