Netflix is seeking a significant amount of working capital to give it cash for such growth-focused things as content acquisitions, a potential M&A or “strategic transactions.”
OK — Netflix is looking for a tremendously huge debt offering.
The video streaming company confirmed Monday a whopping $1 billion bond offering, to qualified institutional investors.
The interest rate set for the senior notes due 2026 is 4.375% — a low yield compared to comparable bond offerings.
The offering was “upsized” from an originally announced $800 million, and the sale of the notes is expected to close on Oct. 27.
Interest will be payable in cash semi-annually in arrears, beginning on May 15, 2017; the notes will mature on Nov. 15, 2026, unless earlier repurchased or redeemed.
News of the debt offering was not enthusiastically greeted by Moody’s Investors Service, which rated the bonds B1 — “junk level”. Likewise, S&P gave an equivalent grade of B+.
Given the significant amount of money Netflix seeks to raise, does the company have a big plan up its sleeves?
Could Netflix be eyeing a company like Viacom, once it reunifies with CBS? Is this another key turning point for TV, OTT and who the future leaders of video entertainment will be?
Even noted forecaster Jack Myers, chairman of MyersBizNet and a panelist at the November 16 Radio INK Forecast 2017 conference, is unsure.