John Malone’s Liberty Media is drawing on its large cash reserves to lighten its debt load through a complicated series of related moves.
The media conglom is spending $197.3 million to exit a credit swap deal that threatened to trigger certain debt covenants due to ongoing market turbulence. In its place will be a new swap agreement at a lower level of $150 million.
“We are efficiently reducing financial risk and increasing transparency to give investors greater certainty,” chief exec Greg Maffei said.
Liberty also said it would move $551 million of Viacom exchangeable debt and $380 million in cash from the balance sheet of Liberty Entertainment to its sibling, Liberty Interactive. That step is a crucial one for any potential split-off of Liberty Entertainment, the parent company of Starz and other key holdings.
Liberty Interactive will be able to use about $300 million of the cash to back a tender offer for the outstanding portion of Liberty Media’s senior debt.