Cablevision Systems Corp. announced on Monday that it will not move forward with a $3 billion dividend because it is in violation of certain covenants under an existing bank credit agreement, and possibly under other debt instruments.
The cable-television giant also announced that it will not proceed with its recently announced $1 billion senior note offering.
According to The Wall Street Journal, the company planned to finance the dividend mostly through a planned $5.5 billion credit agreement. It was during this planning that Cablevision discovered the covenant violations, the company explained
Cablevision, which did not provide further details about the violations, added that it is preparing a comprehensive covenant compliance review and will seek waivers under its bank credit agreement and, if necessary, other debt instruments.
The company also disclosed that it will consider the impact of potential covenant violations on the classification of debt in prior financial statements.
The company has sufficient liquidity to meet operating requirements, it stressed, and its operations have not been impacted by these issues. As for the affect on the Dolan family, which controls Cablevision, they will miss out on a $690 million payday, according to the Associated Press, which cited an estimate by Merrill Lynch.