Cogeco Communications Issues $325 Million 4.743% Senior Secured Notes

Cogeco Communications Inc. (TSX: CCA) recently announced a private offering of $325 million 4.743% senior secured notes due 2029. The offering is expected to close on or about February 27, 2024, subject to customary closing conditions. The net proceeds from the offering will be used to repay existing indebtedness and for other general corporate purposes.

The Notes will be direct and unsubordinated unsecured debt obligations of Cogeco Communications and will rank equally and pari passu with all other unsecured senior indebtedness of Cogeco Communications. The Notes have been assigned a provisional rating of "BB (high)" from DBRS Limited (Morningstar DBRS) with a "Stable" trend, and Cogeco Communications expects that the Notes will receive a rating of "BB+" from Standard & Poor's Ratings Services.

Cogeco Communications is a telecommunications corporation and is the 11th largest hybrid fibre coaxial cable operator in North America, operating in Canada under the Cogeco Cable brand name, in Quebec and Ontario, and in the United States through its subsidiary, Atlantic Broadband in Western Pennsylvania, South Florida, Maryland, Delaware, and South Carolina. Its two-way broadband cable networks provide to its residential and small business customers Analog and Digital Television, High Speed Internet (HSI), and Telephony services. Through its subsidiaries, Cogeco Data Services and PEER 1 Hosting, Cogeco Cable provides its commercial customers a suite of IT hosting, information and communications technology services (Data Centre, Co-location, Managed Hosting, Cloud Infrastructure and Connectivity) with 23 data centres, extensive fibre networks in Montreal and Toronto as well as points-of-presence in North America and Europe. Cogeco Cable's subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CCA).

The issuance of these notes aligns with Cogeco Communications' long-term financing strategy, as it allows the company to secure additional funding to repay existing indebtedness and support general corporate purposes. The 4.743% interest rate is relatively high compared to other recent debt issuances in the telecommunications sector, which may suggest that investors perceive Cogeco Communications as having a higher risk profile. However, it is essential to consider the specific circumstances and market conditions surrounding each issuance.

In conclusion, Cogeco Communications' private offering of $325 million 4.743% senior secured notes is a strategic move that allows the company to secure additional funding to repay existing indebtedness and support general corporate purposes. The higher interest rate may indicate that investors perceive the company as having a higher risk profile, but it is crucial to consider the specific circumstances and market conditions surrounding the issuance.