The Weather Channel has amended a first lien secured credit facility in a way that will both decrease leverage and move its most imminent debt maturity three years down the road. Wall Street ump Moody’s Investors Service sees it as a positive move.
Moody’s does wish, however, that TWC would adopt some of the financial discipline of partial owner Comcast/NBCU.
The credit facility it worth $1B, and its maturity moves from 2017 to 2020. Also, revolver maturity moves from 2016 to 2019. And two $50M debt repayments are built into the maneuver which will take leverage from 7.5x to 7.1x.
Moody’s gives the company a B2 Corporate Family Rating and says its outlook is stable.
According to SVP Neil Begley, the presence of Comcast/NBCU in the ownership structure of TWC is positive mainly in that it guarantees a presence on the Comcast channel lineup.
A detriment is the presence of equity capital companies in the lineup, a factor which produces a tendency to offer debt-financed dividends, a practice Moody’s does not like and which it believes is not reflective of Comcast/NBCU practices.
Begley said, “Good revenue visibility, positive free cash flow generation and high profit margins, support TWCC’s highly leveraged capital structure but the rating remains constrained by the partial private equity ownership and high event risk stemming from past propensity for debt funded dividends and secular pressures facing its TV network. Though TWCC is partially owned by NBCU, it has not exercised any influence to maintain a stronger balance sheet at TWCC, and we do not believe that it is likely to in the future.”
