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Oct 26, 2016 08:40 PM EDT

Netflix $2.37 Billion in Debt Raising Another $1 Billion In Long-Term Debt To Make More Original Series, Films [VIDEO]


With the new loan offering, Netflix's long-term debt increases to over $3 billion.

Netflix has $2.37 billion in long-term debts as of Sept. 30, and it is raising an extra $1 billion in an upgraded debt offering in order to finance the creation of more original content. The new offering was upsized from an original $800 million aggregate principal. The total brings Netflix long-term debt load to over $3 billion. The deal is said to be finalized on Oct. 27, subject to customary closing conditions, Variety reported.

In a statement, Netflix says it intends to use the funds for general corporate purposes, which may include content acquisitions, investments, capex, potential acquisitions and working capital as well as strategic transactions.

According to MarketWatch, Netflix expects international subscriber growth to slow down to 2 million new subscribers during the second quarter. American subscriber growth, on the other hand, is also expected to decline by 500,000 subscribers.

Wall Street is not a fan of slow growth, yet Netflix plans to combat this by investing more in original content and spending on building brand awareness, including its business interests overseas. A significant portion of its expenditures is related to content, aiming for 50 percent of original productions on TV shows and movies on its service. Netflix announced content spending of about $6 billion is earmarked on a profit-and-loss basis for 2017.

Netflix streaming content obligations raised $1 billion closing Q3 to $14.4 billion. The increase reflects expanded rights in new international markets as well as reflective of new and original licensed content, according to International Business Daily. This also includes non-original content that is already part of their library.

Netflix original content slated for 2017 include "Stranger Things" Season 2, "Bloodline" Season 3, Marvel's "Iron Fist" and "Bill Nye" talk show. The company bowed "Black Mirror" Season 3 and "Narcos" Season 2, which is renewed for two more seasons. Netflix will also premiere "The Crown," a drama that chronicles the early life of Queen Elizabeth II.

The new $1 billion debt carries an interest rate of 4.375% with the senior notes maturing in Nov. 26, 2026, unless Netflix redeems or repurchases the said notes earlier.


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