Shaw Communications ups long-term debt by C$595 million, ends Q2 with C$1 billion liquidity

By Lisa Kerner

Charlotte, N.C., April 14 – Shaw Communications Inc. ended its second quarter on Feb. 29 with C$595 million of additional long-term debt due in part to the issuance in February of C$300 million 3.15% fixed-rate senior notes due 2021 and debt incurred related to the acquisition of INetU under ViaWest and Shaw’s credit facility totaling $170 million.

“Our balance sheet remained strong during the quarter with leverage of approximately 2.4 times, almost C$1 billion of liquidity available through our credit facility, as well as approximately C$360 million of cash as of the end of Q2,” said chief financial officer Vito Culmone during the company’s earnings call on Thursday.

Free cash flow use

Shaw generated C$291 million of free cash flow in the current year, according to the earnings release.

The Calgary, Alta.-based telecommunications company used its free cash flow, along with C$300 million of proceeds from a senior note issuance, C$119 million of borrowings under its credit facility, C$178 million of borrowings under ViaWest’s credit facility and C$12 million of proceeds from the issuance of class B non-voting shares to repay the C$300 million senior floating-rate notes and finance the C$223 million acquisition of INetU.

In addition, Shaw used the funds to pay common share dividends of C$189 million, fund the net working capital change of C$96 million, make C$43 million in financial investments, repay C$25 million borrowings under its credit facility and invest an additional net C$25 million in program rights.

Shaw said C$41 million of cash was classified as held for sale at Feb. 29.

The only near-term maturity for calendar 2016 is the 6.15% C$300 million note due in May, which is expected to be funded using cash on the balance sheet, according to Culmone.

Financial highlights

Revenue from continuing operations for the quarter was up 3% at C$1.15 billion and up 3.4% year to date at C$2.3 billion.

Shaw said its operating income for the quarter increased slightly to C$502 million. Year to date, operating income increased 2.5% from the prior-year period to C$1.01 billion.

Net income for the quarter was C$164 million, or $0.32 per share, compared to C$168 million, or $0.34 per share, for the comparable period.

For the six-month period, net income was C$382 million, or $0.75 per share, compared to C$395 million, or $0.81 per share.

Shaw had consolidated free cash flow for the three- and six-month periods of C$119 million and C$291 million, respectively. This compares to C$169 million and C$362 million for the year-ago periods. Shaw attributed the decreases mainly to higher planned capital expenditures which were partially offset by higher operating income before restructuring costs and amortization and lower cash taxes.

Subsequent to quarter-end, Shaw closed the acquisition of WIND Mobile. The transaction had an enterprise value of C$1.6 billion, according to the company. In addition, Shaw completed the disposition of Shaw Media Inc. for total consideration of C$2.65 billion.

© 2015 Prospect News.
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