Sprint signs $2.2 billion deal for the sale and lease-back of certain existing network assets
April 06 2016 - 5:00PM
Business Wire
Attractive cost of funding in mid-single
digits
Sprint Corporation (NYSE: S) entered into a transaction with
several bankruptcy remote entities (collectively “Network LeaseCo”)
for the sale and leaseback of certain existing network assets,
which is expected to close next week and provide the company with
$2.2 billion of funding. When closed, the transaction will
immediately improve the company’s liquidity position at an
attractive cost of capital in the mid-single digits.
“Sprint and SoftBank have worked together again to create a
unique structure that provides Sprint with an attractive source of
capital,” said Sprint CFO Tarek Robbiati. “This transaction is an
important first step in addressing upcoming debt maturities and
allows us to stay focused on our corporate transformation, which
involves growing topline revenues and aggressively taking costs out
of the business to improve operating cash flows.”
Network LeaseCo will acquire certain existing network assets and
then lease them back to Sprint. The assets acquired by Network
LeaseCo will be used as collateral to raise approximately $2.2
billion in borrowings from external investors, including SoftBank.
The $2.2 billion of cash proceeds Sprint expects to receive from
the transaction is scheduled to be repaid in staggered, unequal
payments through January 2018.
For accounting purposes, Sprint will consolidate Network LeaseCo
and Sprint’s consolidated financials will reflect the cash proceeds
it receives and the underlying debt of Network LeaseCo. The network
assets involved in the transaction, which have a net book value of
approximately $3 billion and consist primarily of equipment located
at cell towers, will remain on Sprint’s consolidated financial
statements and will continue to be depreciated. In addition, Sprint
will record interest expense incurred in connection with the debt
of Network LeaseCo.
As of December 31, 2015, Sprint had total liquidity of $6
billion with an additional $600 million of availability under
vendor financing agreements that can be used toward the purchase of
2.5 GHz network equipment.
Safe Harbor
This release includes “forward-looking statements” within the
meaning of the securities laws. The words “may,” “could,” “should,”
“estimate,” “project,” “forecast,” “intend,” “expect,”
“anticipate,” “believe,” “target,” “plan,” “providing guidance,”
and similar expressions are intended to identify information that
is not historical in nature. All statements that address operating
performance, events or developments that we expect or anticipate
will occur in the future — including statements relating to this
sale and leaseback transaction and statements expressing general
views about future operating results — are forward-looking
statements. Forward-looking statements are estimates and
projections reflecting management’s judgment based on currently
available information and involve a number of risks and
uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements. With
respect to these forward-looking statements, management has made
assumptions regarding, among other things, ability to recognize the
expected benefits of the sale and leaseback transaction;
availability of various financings, including any additional
financing transactions; and the timing of various events. Sprint
believes these forward-looking statements are reasonable; however,
you should not place undue reliance on forward-looking statements,
which are based on current expectations and speak only as of the
date when made. Sprint undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by
law. In addition, forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ
materially from our company's historical experience and our present
expectations or projections. Factors that might cause such
differences include, but are not limited to, those discussed in
Sprint Corporation’s Annual Report on Form 10-K for the fiscal year
ended March 31, 2015. You should understand that it is not possible
to predict or identify all such factors. Consequently, you should
not consider any such list to be a complete set of all potential
risks or uncertainties.
About Sprint
Sprint (NYSE: S) is a communications services company that
creates more and better ways to connect its customers to the things
they care about most. Sprint served more than 58.4 million
connections as of December 31, 2015 and is widely recognized for
developing, engineering and deploying innovative technologies,
including the first wireless 4G service from a national carrier in
the United States; leading no-contract brands including Virgin
Mobile USA, Boost Mobile, and Assurance Wireless; instant national
and international push-to-talk capabilities; and a global Tier 1
Internet backbone. Sprint has been named to the Dow Jones
Sustainability Index (DJSI) North America for the past five years.
You can learn more and visit Sprint at www.sprint.com or
www.facebook.com/sprint and www.twitter.com/sprint.
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version on businesswire.com: http://www.businesswire.com/news/home/20160406006393/en/
SprintMedia Contact:Dave Tovar,
913-315-1451David.Tovar@sprint.comorInvestor Contact:Jud
Henry, 800-259-3755Investor.Relations@sprint.com
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