AT&T, Comcast propose potential debt swap

By SUSAN RUSH
From CED Broadband Direct, August 13, 2002

With approval of the proposed merger of AT&T Broadband and Comcast Corp. possibly only months away, the companies are looking to shore up their balance sheets. AT&T Corp. may exchange as much as $11.8 billion in debt.

In a filing with the Securities and Exchange Commission, the companies said a decision to proceed with the exchange offer will be based on market and business conditions over the next several months, and finalization of the terms of the exchange offer.

The offer consists of two types of transactions. The first involves an exchange of certain series of AT&T notes for new notes that would ultimately become obligations of AT&T Broadband Corp. prior to the merge. AT&T Comcast would guarantee these obligations upon completion of the merger.

The second transaction, which involves the refinancing of existing debt, calls for other series of AT&T notes to be exchanged for new notes that would remain obligations of AT&T.

Neither AT&T, AT&T Broadband, nor any other entity would receive proceeds from the issuance of the new notes in the exchange offer.

AT&T and Comcast's shareholders approved the proposed merger last month. If the deal makes it through regulatory review by the U.S. Department of Justice and the Federal Communications Commission, the deal could close by the end of this year, creating an MSO that will serve more than 22 million subscribers.