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Netflix plans $400-million bond offering

January 29, 2013|By Dawn C. Chmielewski
  • Netflix plans to raise $400 million in a bond offering to help position the company for further growth.
Netflix plans to raise $400 million in a bond offering to help position the… (Gareth Cattermole / Getty…)

Netflix Inc. plans to raise $400 million by selling eight-year notes, as the online video service positions itself for growth.

The company said it planned to use about $225 million from the offering to retire about $200 million in outstanding debt, and use the remaining proceeds for general corporate purposes, including investments, potential acquisitions and strategic transactions.

Chief Financial Officer David Wells talked about Netflix's plans to capitalize on the ability to get low-cost capital during a recent investor call. He said the cash could help finance more original series, such as "House of Cards," which debuts Feb. 1, if the program is a hit with subscribers.

"I would say this about the opportunity presented by the debt market, and the ability to get low-cost capital, and for us to preserve the flexibility," Wells said. "If we see massive success with originals, to preserve the flexibility, to expand that program, and to develop more down the road ... This is about long-term planning for the business."

Netflix's stock has been on the rise since the movie and television subscription service beat expectations in terms of domestic subscriber growth and earnings in its fourth quarter. It was trading at $168.23 at midday Tuesday, well above its 52-week low of $52.81.

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