Rogers Communications Preparing Bond Sale to Fund Maple Leaf Sports Purchase
Rogers Communications Inc. is considering issuing 30-year high-yield bonds in US and Canadian dollars to potentially finance its acquisition of a stake in Maple Leaf Sports & Entertainment Inc.
The Canadian telecommunications and cable company is currently engaging with investors in both countries to gauge interest in the bond offerings. The bonds in both currencies are expected to have a 30-year maturity and include a call option for Rogers to buy back at least a portion of the bonds in five years.
Rogers plans to acquire a 37.5% stake in Maple Leaf Sports & Entertainment, the parent company of the Toronto Maple Leafs (NHL) and Toronto Raptors (NBA), for approximately C$4.7 billion ($3.3 billion). The acquisition from BCE Inc. will give Rogers a controlling interest in Canada's most valuable sports franchise.
Despite holding investment-grade credit ratings, Rogers has indicated that financing the purchase will not materially impact its debt metrics. The company is also reportedly close to finalizing a deal to sell minority interests in its wireless infrastructure to Blackstone, a transaction that is expected to reduce debt further.
According to a document obtained by Bloomberg, the contemplated bond offerings are expected to be rated Ba1 by Moody's and BB by S&P Global Ratings, Fitch, and DBRS. Proceeds may also be allocated to refinance existing debt obligations.
Notably, the US dollar-denominated bonds will exhibit certain equity-like features, such as their relatively long maturity and the option to defer interest payments, as noted by S&P in a statement. S&P classifies the bonds as "hybrid securities" due to their characteristics of both debt and equity.
Rogers currently holds an issuer rating of Baa3 from Moody's and BBB- from S&P, Fitch, and DBRS, which represents the lowest investment-grade rating.