Time Warner Cable Inc., the second-largest U.S. cable operator, would consider taking on more debt if it came across an attractive enough merger or acquisition, Chief Financial Officer Artie Minson said at a conference.
While the New York-based cable provider doesn’t feel the need to get bigger, the company would add more debt to its balance sheet under the right circumstances, Minson said at Goldman Sachs Group Inc.’s Communacopia Conference in New York. The company’s current leverage ratio target is 3.25 times earnings before interest, depreciation, taxes and amortization.
“If the right opportunity came along and there was a very clear path of deleveraging over a quick period of time and the deal made sense from a return perspective, we would stretch for the right opportunity,” said Minson, who declined to say how much debt Time Warner Cable would consider adding.
Time Warner Cable, which has about 12 million video subscribers, has spurned merger advances in the past, at least in part because of debt concerns, people familiar with the situation have said. John Malone’s Liberty Media Corp., which owns a 27 percent stake in Charter Communications Inc., held discussions with Time Warner Cable about a deal with Charter earlier this year, the people said. Debt was an issue of contention then, according to the people.
Charter, the fourth-largest U.S. cable provider, has about a third as many customers as Time Warner Cable. Liberty and Charter had discussed the idea of borrowing against the assets of both companies to complete a deal, the people said.
Time Warner Cable currently has about $23.5 billion of net debt and a leverage ratio of about 3 times, Minson said last month on a conference call.
Verizon Communications Inc., meanwhile, raised $49 billion in debt to acquire full control of Verizon Wireless from Vodafone Group Plc.
“If there are deals and there are transactions, what we’ve proven over the past couple of years in M&A is we’ll be really disciplined about it,” Minson said.
© Copyright 2022 Bloomberg News. All rights reserved.