WarnerMedia Parent AT&T Seeks $5.5 Billion Loan; Says Financial Position Remains Strong

With a high-profile subscription streaming video platform HBO Max launching next month, and many of its business segments at WarnerMedia Entertainment idle due to the coronavirus pandemic, AT&T April 7 announced a $5.5 billion term-loan agreement with 12 banks to provide additional financial “flexibility” to what it characterized as an “already strong cash position.” The loans are pre-payable without penalty.

The telecom said it had about $12 billion in cash on hand at the end of 2019. It also ended last year with about $170 billion in debt — much of it accrued from the $85 billion acquisition of Time Warner, whose assets include Warner Bros., HBO and Turner.

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In a regulatory filing, AT&T said the “strength and relevance” of its core subscription businesses (telecom and pay-TV) would provide enough cash from operations to support network investments, dividend payments and debt retirement, as well as the ability to invest in business opportunities that arise as the economy recovers.

The telecom said it expects to generate $2 billion from the expected closing later in 2020 from the previously announced divestiture of television channels in Bulgaria, Czech Republic, Romania, Slovakia and Slovenia., as well as additional proceeds from a number of other real estate and cell tower sales.

The company expects to close the sale of its Puerto Rico and U.S. Virgin Islands operations later this year. AT&T also has a $15 billion revolver in place but said it sees need or plans to use it in 2020.

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While it suspended a stock repurchase program, AT&T said it “looks forward” to continuing to pay a quarterly dividend to shareholders as it has for 36 years. On March 27, the board of directors declared a dividend payable on May 1, to stockholders of record of its common and preferred shares at the close of business on April 9.

The telecom also announced it hold its 2020 annual meeting on April 24 (10 a.m. ET) via webcast only.