NEW YORK-Through its trustee, TCI Group, Tele-Communications Inc. sold $300 million March 11 of capital securities, a debt issue with a final maturity date of 2027.
Proceeds of the sale are intended for use in repurchasing over time the company’s outstanding publicly traded debt and to repay commercial paper and bank debt.
A cable television operator, TCI also has invested just under $1 billion in the past two years as part of its 30 percent ownership stake in Sprint Spectrum L.P. Sprint Spectrum owns personal communications services licenses in major cities throughout the country, covering a population of more than 150 million.
“TCI continues to work to reduce leverage through improved operations and capital expenditure reductions,” said Brendan R. Clouston, chief financial officer of the Englewood, Colo.-based company. “This issuance of capital securities furthers this leverage reduction and structurally helps to improve TCI’s balance sheet.”
Capital securities is the name given the issue by co-lead underwriters Merrill Lynch & Co. Inc. and Lehman Brothers Inc., both in New York. The name refers to a debt instrument generically called trust originated preferred securities. TCI Communications Inc., the company’s domestic communications subsidiary, trades them on the New York Stock Exchange.
“They are called a `trust’ because they aren’t issued by us, but by our trustee, TCI Group; we have some ownership in the securities and we guarantee payment,” said Linda J. Dill, a spokesman for Tele-Communications’ investor relations department. “They are called `preferred’ because we make the distribution of payments.” The securities provide investors with a repayment, called a dividend, of 9.65 percent.
