January 29, 2013
Netflix (NASDAQ: NFLX ) has announced a new debt offering. The digital video company will sell senior debt notes due for repayment in 2021, for a total value of $400 million.
The announcement follows through on comments made in last week's earnings announcement, when the company said, "We are exploring taking advantage of the current low interest rate environment to refinance our $200 million in outstanding notes and raise additional cash through new debt financing. This would give us additional reserves as well as increased flexibility to fund future originals."
Of the new capital, $225 million will be used to pay off the existing senior notes due in 2017. If allowed to remain until expiration, these notes would have cost Netflix about $290 million in total principal plus interest payments. Interest rates on the new notes will be determined by negotiations with debt buyers. Details should be available in a few days.
Netflix also has a $200 million tranche of interest-free convertible debt notes. The total long-term debt load after this transaction will be approximately $600 million.
Beyond the refinancing use, Netflix will use remaining proceeds for "general corporate purposes, including capital expenditures, investments, working capital and potential acquisitions and strategic transactions."