Liberty to use $3 billion of debt at Virgin Media for acquisition

New York, Feb. 5 - Liberty Global, Inc. will increase the debt at Virgin Media Inc. by more than $3 billion as part of the financing for its acquisition of Virgin Media, according to a news release.

Liberty will also draw on its existing credit facilities, use its own and Virgin Media's cash, and draw on other sources of liquidity at Virgin Media.

Credit Suisse is financial advisor, global coordinator and consent solicitation agent for the debt financing.

Virgin Media's debt will "well within" Liberty's normal leverage target of four to five times annualized operating cash flow. Pro forma for the transaction, leverage of the combined company at Dec. 31, 2012 would have been five times, Liberty added, noting that at this level it would be "a modest deleveraging event" for current Liberty shareholders.

Liberty said it is aiming for a leverage in the mid-4s by the end of 2014.

Liberty announced late Tuesday that it would acquire Virgin Media in a $23.3 billion stock and cash merger.

Virgin Media shareholders will receive $17.50 in cash, 0.2582 Liberty Global series A shares and 0.1928 Liberty Global series C shares for each Virgin Media share. Based on Monday's closing prices, the per-share value is $47.87, a 24% premium to Virgin Media's closing price that day.

An increase in scale, synergies, use of Virgin Media's expertise to accelerate Liberty's growth and other factors will result in "attractive free cash flow enhancements to our shareholders," said Mike Fries, president and chief executive officer of Liberty Global, in a news release. "As a result, we intend to increase our commitment to share buybacks going forward with an initial target of approximately $3.5 billion over a two-year period upon closing."

Liberty is an Englewood, Colo., international cable company. Virgin Media is a New York-based provider of broadband, television, mobile phone and home phone services in the United Kingdom.

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