Warner Music refi leaves no maturities until 2028; cost of debt falls

By Devika Patel

Knoxville, Tenn., Nov. 16 – Warner Music Group Corp. reduced its weighted average cost of debt to 3.2% from 4% since its IPO and also has extended maturities, with no debt due until 2028, in part due to a refinancing last quarter in which the company replaced 3 5/8% notes due 2026 with 2¼% 10-year notes.

“Our financial transformation program remains on track and is expected to deliver annualized run rate savings of about $35 million to $40 million once fully implemented in 2023,” acting chief financial officer Lou Dickler said on the company’s fourth quarter and year ended Sept. 30 earnings conference call on Monday.

“Since our IPO, we have actively managed our capital structure reducing our weighted average cost of debt from 4% to 3.2% and extending maturities with our nearest maturity date now in 2028,” he said.

Adjusted OIBDA increased 25.3% in the fourth quarter to $218 million, compared to $174 million in the prior-year quarter.

Adjusted EBITDA increased 33.9% in the quarter to $237 million, compared to $177 million in the prior-year quarter.

Cash and cash equivalents were $499 million as of Sept. 30, 2021, compared to $553 million as of Sept. 30, 2020.

Long-term debt was $3,346,000,000 as of Sept. 30, 2021, compared to $3,104,0000,000 as of Sept. 30, 2020. Net debt was $2.8 billion at the end of the quarter.

On Aug. 5, the company sold €445 million of 2¼% 10-year senior secured notes (Ba3/BB+).

The notes came on the low end of price talk in the 2 3/8% area, lower still to initial guidance in the mid-2% area.

Credit Suisse Securities (USA) LLC had the books for the Rule 144A and Regulation S offer.

The notes come with five years of call protection.

The issuing entity was WMG Acquisition Corp., a wholly owned subsidiary of Warner Music Group.

Proceeds were earmarked for a planned redemption of Warner Music Group’s 3 5/8% senior secured notes due 2026, which was also announced on Aug. 5.

The company issued a conditional notice of redemption saying it would redeem the notes on Aug. 16.

Warner Music is a New York-based music entertainment company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.