Cablevision

Earlier today we reported that a source inside a Cablevision subsidiary had told us that there were widespread rumors that the Dolans might break-up the company, leaving the television channel and content oriented in a smaller public company while taking the cable operating and facilities business to a privately held company. This deal would be significantly different from the one publicly proposed by the Dolan family.
Now we’ve heard from the spokesmen for both Cablevision and the Dolan family. Both were perfectly nice guys but, of course, didn’t exactly spill the beans and confess that we had uncovered their Super Secret Deal.
Cablevision: “It is Cablevision’s longstanding policy not to comment on rumors and speculation in the media.”
Dolan Family: “I can’t comment on rumors and speculation. The Dolans remain committed to the deal they have publicly announced.”
So the story is neither confirmed nor denied. Make of that what you will.

  • 11 Oct 2006 at 2:45 PM
  • Banks

Merrill & Bear Stearns Land Cablevision Loan Deal

cablevision.jpgMerrill Lynch and Bear Stearns have each committed to provide the family that controls Cablevision with one-half of the $12.4 billion of debt financing the acquisition of the cable company, according to a letter filed with the SEC yesterday.
Of course, it’s not quite accurate to say that the money is being provided to the Dolan family. The actual borrowers are Cablevision and a series of shell holding companies who secure the loans with Cablevision stock and assets. That’s leveraged buyout magic—buying a company with money you don’t have and collateralizing the loans with the company you don’t own.
The competition to be the lead lenders on the deal was most likely intense, with at least a handful of banks submitting letters to the Dolans. The Cablevision assets are very valuable as collateral and the fees attached to loans of this size most likely quite large. One surprising aspect of the winning Merrill-Bear Stearns letter, however, is that it retains a full-throated due diligence “out”—a provision allowing the banks to refuse to lend money if their due diligence investigation turns up serious problems with the company. In heavily sought after deals, this language is often watered down.
Unfortunately, the real red-meat of the deal is not disclosed. We’re talking, of course, about the bank fees and interest rates. These don’t get disclosed because they are not considered relevant to public investors in a going private transaction. Since the public shareholders are being bought out, they don’t have any economic interest in knowing what fees and interest rates the private company will be paying. So the fee letter gets kept under wraps.
Project Central Park Credit Facilities Commitment Letter [SEC]
Dolans Obtain $12.4 Billion for Cablevision Buyout [Bloomberg]

DealBreaker Scoop: Cablevision Rife With Breakup Rumors

Rumors are circulating within Cablevision that the proposed buyout by the company’s founding Dolan family may break the company into two parts, according to a source familiar with the situation. The Dolan family made a bid to take the company private earlier this week but the talk within Cablevision is that the company may be split in two—one company privately owned by the Dolans and one company remaining public.
This is how people are saying the deal would work. A new private company owned by the Dolans would acquire the cable system operating company, as well as assets such as the Knicks and Madison Square Garden. The public company would be left with only the “content” heavy units, such as its various cable television channels. The two companies would operate independently, with the Dolans wholly owning the new private company and maintaining a large stake in the public company.