The Rogers Building in downtown Toronto on July 9.CHRIS HELGREN/Reuters
Rogers Communications Inc. RCI-B-T is asking investors who own about $12-billion in debt to extend the mandatory buyback deadline of its bonds by one year in case it is not able to complete the acquisition of Shaw Communications Inc. SJR-B-T by Dec. 31.
In light of recent rises in interest rates, it is also proposing to pay up to about $780-million in additional fees if each investor agrees. That will ensure Rogers will have financing available should the deal proceedings extend past the bond deadline.
The special mandatory redemption bonds were issued by Rogers in order to fund its acquisition of the Calgary-based telecom. They came with requirement that Rogers buy back its bonds at 101 per cent of the principal amount should the deal not go through by the end of the year.
Rogers and Shaw have agreed to close the deal by Dec. 31, but have the option to extend proceedings until the end of January if necessary.
The companies continued to express confidence that they will be able to meet the deadline, but the acquisition remains contested. Canada’s antitrust watchdog has sued to stop the deal, arguing the merger would reduce competition and result in higher prices for Canadians.
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The bond extension applies to eight series of senior notes – five denominated in U.S. dollars and three in Canadian dollars. The requests for extension expire Aug. 31.
Rogers chief financial officer Glenn Brandt has said in previous earnings calls that the company might utilize this option. In July, Mr. Brandt said that while the company was confident it could complete the deal before the end of the year, it had several tools at its disposal should it need extra time.
“We could seek alternate funding through bank group. We could seek to extend the [bonds]. We could seek to access the capital markets. Any one of those are open to us,” Mr. Brandt told analysts.
In order to sweeten the deal for bondholders, Rogers is offering two consent fees for each of the eight series of notes. The initial consent fees range per $1,000 from US$23.50 to US$61.70 for the U.S. denominated bonds and $36.50 to $39.60 for the Canadian bonds, and will be paid to each bond holder who consents to extending the deal.
The additional consent fee per $1,000 will be paid if the deal runs over the initial Dec. 31 deadline, and ranges from US$11.45 to US$30.55 for the U.S. bonds and $17.95 to $19.50 for the Canadian bonds.
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