Netflix has announced plans offering $1.5 billion in debt notes to finance its operations.
The company “intends to use the net proceeds from this offering for general corporate purposes, which may include content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions,” a press release reports.
Netflix reported selling $1.9 billion of senior bonds in its most significant offering to date. According to the people familiar with the matter, who decided to stay anonymous as the details are private, the 10.5-year notes will bring in 5.875 percent, within the initially discussed range of 5.75 percent to 6 percent.
The 2018 first quarter was a booming one for the company as it exceeded subscriber-growth estimates both in the U.S and abroad, hitting 125 million total streaming customers at the end of this period. The company restated that it plans to spend $7.5 billion to $8 billion in 2018 on content on a profit/loss basis. Netflix’ original programming is one of the reasons why there has been a growth in subscribers. Netflix plans to develop ver 30 original international series soon.
Netflix notified its investors that it will “continue to raise debt as needed to fund our increase in original content.” The company had $2.6 billion in cash and equivalents as of March 31. Additionally, the long-term debt on the company is $6.54 billion, and long-term content payment obligations are for $3.44 billion.
“Our debt levels are quite modest as a percentage of our enterprise value, and we believe the debt is lower cost of capital compared to equity,” Netflix said in its April 16 quarterly shareholder letter.
Some of the popular Netflix series include hits such as Stranger Things, The Crown, House of Cards, Orange is the New Black, and Unbreakable Kimmy Schmidt. Some of the films produced by Netflix are Mudbound, 1922, and A Christmas Prince.
On April 16, Netflix revealed that it started the year at $196.10 and closed at $311.65 per share. The company stock has increased by 63 percent in 2018.
This newest proposal of debt offering would be the fifth time in the last three years by Netflix to raise more than $1 billion through bonds. Additionally, Netflix obtained credit to borrow up to $750 million.