CBS Corporation (CBS) announced that two subsidiaries of its outdoor advertising business – CBS Outdoor, intend to issue senior unsecured notes worth $800 million. The notes issue relates to the company’s prior disclosure of spinning off its CBS Outdoor business and the conversion of the same into a Real Estate Investment Trust (REIT).
Simultaneous to the notes issue, the subsidiaries are likely to enter into a term loan worth $800 million. Under the terms of the issue, CBS Outdoor is slated to pay a portion of the proceeds of the issue and the term loan to its parent company. The remaining proceeds will be absorbed by CBS Outdoor for its regular cash requirements and other corporate needs.
The offering will be placed privately to both qualified institutional investors in the U.S. and investors residing outside the U.S. The notes to be offered are not registered under the Securities Act and hence are prohibited from being sold or offered in the U.S. without being registered or enjoying any related exemption.
Borrowing costs are still considerably low in the U.S., enabling companies to obtain easy financing. Corporate bonds and borrowings from banks are in high demand as the U.S. treasuries are yielding low rates. We believe that this strategic move by the company will provide it the financial flexibility to drive long-term growth.
CBS Corporation is a N.Y based company, operating through Entertainment, Publishing, Cable Networks; Local Broadcasting and Outdoor Americas. The company concluded the divestment of the European and Asian segments of its Outdoor advertising business in Sep 2013, for $225 million. The transaction resulted in a gain of $147 million, partly offset by an after-tax charge of $110 million.
The company reported third-quarter 2013 results in Nov 2013, whereby its reported long-term debt stood at $5,944 million and a free cash flow of $402 million was generated during the quarter.
This mass media company holds a Zacks Rank #3 (Hold). Other better-ranked stocks in the services industry include Cross Country Healthcare, Inc. (CCRN), SouFun Holdings Ltd. (SFUN) and Pearson plc (PSO). While Cross Country and SouFun Holdings carry a Zacks Rank #1 (Strong Buy), Pearson has a Zacks Rank # 2 (Buy).
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