Turner Broadcasting System on Wednesday sweetened the interest rate--to 10.25% from 10%--on $440 million of notes that it will issue as part of the financing package for its $1.25-billion purchase of MGM/UA Entertainment Co.
Turner's hike in the interest rate runs counter to what is happening in the bull market in bonds, where yields are moving sharply lower.
The apparent reason, the announcement indicated, is that Turner has fallen short of a majority of consents from holders of the approximately $400 million in MGM/UA notes needed to make certain amendments to the indenture on those notes. Consents had been obtained on $54 million of the notes as of Tuesday, and only $6 million of them have been tendered for Turner notes in the swap.
Turner rescheduled the deadline for the exchange offer on the notes to March 31 from March 21.
The change in terms on the notes also will result in a further delay in the sale closing. MGM/UA spokesman Arthur Rockwell now puts it at March 24 or 25. He said that 50% of the consents by MGM/UA note holders could be obtained by Friday, permitting the revised offer to become effective by next Tuesday.