Rogers secures $7 billion from Blackstone-led grou

TORONTO - Rogers Communications Inc. (TSX: RCI.A and RCI.B; NYSE: RCI), currently valued at $14.35 billion in market capitalization, has entered into a definitive agreement for a $7 billion equity investment from a consortium led by Blackstone, alongside prominent Canadian institutional investors. The deal, announced today, involves Blackstone acquiring a minority stake in a new subsidiary that will hold a portion of Rogers’ wireless network, while Rogers retains full operational control. According to InvestingPro analysis, Rogers currently maintains a FAIR Financial Health Score of 2.46, with the stock trading below its Fair Value.

The investment group includes the Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec, Public Sector Pension Investment Board, and British Columbia Investment Management Corporation. Rogers plans to use the proceeds to repay debt, with an expected reduction in its debt leverage ratio by 0.7x post-transaction. This move is particularly significant given the company’s current total debt of $33.71 billion and debt-to-equity ratio of 4.66x. For deeper insights into Rogers’ financial position and debt metrics, InvestingPro subscribers can access comprehensive analysis and ProTips.

Glenn Brandt, Rogers’ Chief Financial Officer, stated that this move will bolster the company’s investment-grade balance sheet by lessening borrowings and unlocking the value of key assets. The transaction is anticipated to close in the second quarter of 2025, subject to standard closing conditions.

Blackstone will possess a 49.9% equity interest and a 20% voting interest in the subsidiary, while Rogers will maintain a 50.1% equity interest with an 80% voting interest. Rogers may opt to buy Blackstone’s stake in the subsidiary between the eighth and twelfth anniversaries of the closing.

The subsidiary is expected to distribute about $0.4 billion annually to Blackstone in the first five years following the closing, with Rogers’ average capital cost projected to be 7% per annum. The investment will be reported as equity in Rogers’ consolidated financial statements and is expected to be treated as equity by credit rating agencies Moody’s, S&P Global Ratings, and DBRS Limited.

This strategic partnership underscores investor confidence in Rogers and its assets, as noted by President and CEO Tony Staffieri. The company currently generates annual revenue of $14.33 billion and offers investors an attractive dividend yield of 5.33%. Additionally, Rogers plans to seek consent from senior note holders for proposed amendments to its bond indentures. Further details on the transaction will be disclosed in a material change report on Rogers’ SEDAR+ profile. For a complete analysis of Rogers’ investment potential and access to the Pro Research Report covering 1,400+ top stocks, visit InvestingPro.

The information in this article is based on a press release statement from Rogers Communications Inc.

In other recent news, Rogers Communications has reported its fiscal year-end results for 2024, highlighting its compliance with U.S. securities laws through the filing of Form 40-F. This filing provides transparency and insight into the company’s financial health and strategic direction. Additionally, Rogers has initiated consent solicitations to amend indentures related to a subsidiary equity investment with Blackstone, aiming to clarify that this investment is not subject to debt limitations. This move is expected to aid in debt repayment and is being treated as equity by major rating agencies.

In other developments, Rogers Communications filed its annual report to shareholders, ensuring compliance with regulatory requirements and providing a comprehensive view of its operations and financial performance. Furthermore, BofA Securities has downgraded Rogers’ stock rating from Buy to Neutral, citing concerns over slowing margins, high leverage, and uncertainties related to investments in sports assets. The firm also lowered its price target for Rogers, reflecting the market’s current uncertainties and the company’s exposure to potential changes in government policy on immigration.

These recent developments underscore the challenges and strategic maneuvers Rogers Communications is navigating in a competitive telecommunications landscape.

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