It appears that The Walt Disney Company is looking to take on even more debt in an effort to raise additional cash. While an amount was not specified, the company filed a prospectus with the Securities and Exchange Commission for senior (or higher priority) notes that will mature between 2026 and 2060.
UPDATE 05/12/20: The new debt raised totals $11 billion, with interest rates ranging from 1.75% to 3.8%.
Speculation is that this longer-term debt will be used to pay off some of the credit agreements that the company has entered into over the last couple of months.
Neil Begley, an analyst for Moody’s Investor Service, commented to Deadline on the upcoming transaction:
We believe that the cash on hand and bank facilities will be more than adequate to meet all of 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.
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.
Currently Disney is sitting on a cash balance of $14.3 billion and has a revolving loan capacity of $17.25 billion, which will remain untouched after the sale of these notes.