Fox Corp. sold $8.4 billion of investment-grade bonds on Tuesday to pay off the bridge loan it used to close its purchase of Roku Inc.
The Murdoch-controlled media company split the sale into seven maturities, according to its pricing term sheet. The biggest pieces were $1.75 billion of 6.4% notes due 2036, priced 145 basis points over Treasurys, and $1.5 billion each of 5.9% notes due 2031 and 7.15% notes due 2056. Fox also sold $750 million of 5.625% notes due 2029 at 85 basis points over, $1.25 billion of 6.15% notes due 2033, $1 billion of 7.125% notes due 2046 and $650 million of 7.3% notes due 2066, the longest, at 200 basis points over the benchmark.
Paying for the Roku close
Fox will use the net proceeds and cash on hand to repay everything outstanding under its $8.4 billion bridge facility. The company drew that bridge and a term loan to fund part of the cash paid to Roku stockholders when it completed the $22 billion takeover months ahead of schedule. Bridge loans are meant to be temporary and get more expensive the longer they stay outstanding, so borrowers typically refinance them in the bond market as soon as a deal closes.
The pricing shows the toll of a higher-rate market. The 10-year piece yields about 6.44% at issue, and the 30- and 40-year bonds about 7.2% and 7.35%. Fox’s shares fell after the sale was announced. Morgan Stanley, Citigroup, Deutsche Bank, Goldman Sachs and J.P. Morgan ran the books.
Terms
The notes settle Nov. 13. Each series carries a change-of-control put at 101% and can be redeemed early at a make-whole premium before a par-call date one to six months ahead of maturity. The sale came on the same afternoon the Treasury paid 5.02% on new 10-year notes, as yields jumped after a hotter-than-expected inflation report.
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