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Take-Two Drums Up $100 Million With Note Issuance

In what is likely an attempt to more easily manage its $70 million debt, Take-Two's effectively borrowing $100 million in the form of a senior note offering.
In what is likely an attempt to more easily manage its debt, Take-Two's effectively borrowing $100 million in the form of a senior note offering, which it'll have to buy back from the purchasers by 2014. The Grand Theft Auto publisher just reported $10 million in losses -- although it maintains about $180 million in working capital on hand, it has $70 million in debt on a credit line, and Wedbush Morgan analyst Michael Pachter speculates that the bond issuance is intended to refinance that credit line with "something more predictable." This gives them "the flexibility to repay the $100 million with stock in 2014 (convertible)," Pachter tells Gamasutra. "If they get their stock up by then, it will end up being a great deal." According to the analyst, Take-Two must keep around $50 million in cash in order to maintain international operations, and $100 million on hand to fund itself -- "so they are fine with their current cash position," he says. "This is most likely intended to shift the short term line of credit to a five year debt -- sort of like paying credit card debt with a home equity line."

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