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Street Eyes DirecTV's $2.95 Billion Debt


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#1 OFFLINE   Steve Mehs

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Posted 11 February 2003 - 05:12 AM

DirecTV said Monday it intends to privately offer up to $1.4 billion in senior notes due 2013 as well as arrange $1.55 billion in new senior secured credit facilities.

DirecTV, controlled by Hughes Electronics, said it expects to raise the $2.95 billion in debt by early March.

The DirecTV debt announcement caught the eyes of Wall Street analysts, which continue to closely watch any future acquisition of the coveted satellite TV assets. William Kidd of Lehman Brothers said the move may be a precursor to the sale of General Motors' stake in Hughes, with the bulk of money for any purchase being pre-arranged at Hughes as opposed to being contingent on a buying company's ability to arrange bridge financing.

"We believe the move reflects GM's confidence that the sale of its block is now fairly timely. As an aside, the financing also allows GM to monetize a large portion of its stake through a repurchase, even if no deal is consummated for Hughes," Kidd said.

DirecTV said it plans to distribute to Hughes the net proceeds from the debt sale and the term loan portion of the credit facilities. The money will enable Hughes to repay outstanding debt under existing credit facilities, fund its business plan through projected cash flow breakeven and for other corporate purposes, the satellite TV company said.

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