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Triple exchange clears the line

A complex debt exchange during a merger transaction saved AT&T Broadband and Comcast the expense and the hassle of raising new debt. Bankers won’t want other companies to follow suit.

AT&T gets an adjustment

The MERGER OF AT&T Broadband and Comcast was finally completed on November 18 2002, creating the largest broadband and cable company in the US. The aggregate enterprise value of the merged company is $60 billion, including stock and debt.

It was an impressive achievement and the final step in an AT&T corporate restructuring programme that had begun in October 2000 with the pledge to spin off two of its businesses, AT&T Wireless and AT&T Broadband. The spin-off of AT&T Wireless took place in July 2001. Then Comcast bid for AT&T Broadband's business and AT&T agreed to a merger. This left a slimmed-down AT&T at the end of 2002 focused on AT&T Business and AT&T Consumer, its traditional communications businesses.

Bank restructuring advice spread over two years had cost the company dear. The AT&T Broadband and Comcast merger was inevitably going to involve more expense, even just in the area of its debt restructuring. Part of the initial merger agreement made in December 2001 meant that AT&T would have to get consent from its bondholders for the merger to go ahead.

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