DirecTV downsizes to $2.3 billion, talks six-year secured notes to yield in 6% area

By Paul A. Harris

Portland, Ore., July 21 – DirecTV Entertainment Holdings LLC shifted $800 million of proceeds to its bank loan from the concurrent bond offering on Wednesday, according to market source.

The downsized $2.3 billion offering of six-year senior secured notes (BB/BBB-) is talked to yield in the 6% area, tight to earlier guidance of 6% to 6½%.

The bond deal, which was downsized from $3.1 billion, is set to price on Thursday.

Credit Suisse Securities (USA) LLC is the left lead bookrunner. BofA Securities Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., BMO Capital Markets Corp., Goldman Sachs & Co. LLC, Mizuho Securities USA Inc., MUFG, UBS Securities LLC, Barclays and Jefferies LLC are the joint bookrunners.

The Rule 144A and Regulation S notes become callable after two years at par plus 75% of the coupon. A special call provision allows the issuer to redeem 10% of the notes annually at 103 during the non-call period. The notes also feature a two-year 40% equity clawback and a 101% poison put.

The company will issue via its wholly owned subsidiaries DirecTV Financing, LLC and DirecTV Financing Co-Obligor, Inc.

The Dallas-based provider of digital video services, which is being spun off from AT&T, Inc., plans to use the proceeds plus a term facility to pay down, in cash, intracompany debt owed to AT&T, and to fund the reimbursement of certain financing expenses and shared transaction expenses immediately prior to closing the spinoff.

The concurrent term loan increased to $3.9 billion from $3.1 billion with Wednesday's shift of proceeds.

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