If AT&T completes its colossal acquisition of Time Warner, the combined company will in some ways look more like a bank than a media conglomerate.

The balance sheet of the merged company would have so much debt on it — about $175 billion — that it would exacerbate its position as the largest nonbank corporate issuer, and make it bigger than some financial institutions.

That debt load represents one of the biggest risks in the merger, experts and analysts say.

AT&T plans to issue about $40 billion in new debt to finance the cash portion of its $85.4 billion takeover of Time Warner, which was announced on Saturday. That is in addition to the borrowing that took place to purchase DirecTV for $48.5 billion in cash and stock, a deal that closed last year, and other corporate debt to fund ongoing operations.

“When they did the DirecTV deal, we thought they reached the limit,” said Mark Stodden, an analyst who covers AT&T for Moody’s Investors Service. “Now they’re back with this deal, which is even bigger.”

Read the Full Article: Source – The New York Times
Time For Truth: (The New York Times) – To Secure a Mega-Merger, AT&T Plans to Shoulder Mega-Debt

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