Sprint Improves Liquidity by More Than $3 Billion with Two New Transactions
April 29 2016 - 10:00AM
Business Wire
Second Mobile Leasing Solutions, LLC
transaction provides $1.1 billion of funding
New bridge financing facility of $2 billion
Company has added more than $5 billion of
liquidity in April
Sprint Corporation (NYSE:S) signed its second deal with Mobile
Leasing Solutions, LLC (MLS) for the sale and lease-back of certain
leased devices. Arranged by Mizuho Securities, Co., LTD, this
transaction is expected to provide the company with approximately
$1.1 billion in cash proceeds. In a separate transaction, the
company signed an 18-month bridge financing facility arranged by
Mizuho Bank, LTD, providing $2 billion of additional liquidity.
These transactions, in addition to the $2.2 billion of
network-related financing that was announced earlier this month,
have improved the company’s liquidity position by more than $5
billion in April.
Second MLS Transaction
By executing its second transaction with MLS, Sprint continues
to help mitigate the working capital impacts associated with
leasing devices to its customers. The company sold approximately
$1.3 billion of leased device assets for approximately $1.1 billion
of cash proceeds, which the company expects to receive in the
coming weeks, and $186 million of contingent deferred
consideration.
In contrast with the first MLS transaction, this sale lease-back
arrangement will be accounted for as financing (on-balance sheet).
Accordingly, the assets will remain in Property, Plant, &
Equipment and will continue to be depreciated over their remaining
useful lives. The payments made to MLS under the lease-backs will
be reflected as principal repayments and interest expense over the
respective terms. Future changes in the fair value of the financing
obligation will be recognized in earnings over the course of the
arrangement.
MLS was formed by a group of equity investors including SoftBank
and has obtained debt financing from several lenders including
leasing companies and international and domestic banks. As with the
first transaction, Brightstar Corp is providing its lease
management and asset tracking system, as well as reverse logistics
and device remarketing services. Also consistent with the first
transaction, MLS executed a forward purchase agreement with
Foxconn, which helps reduce the downside risk of future changes in
device residual values.
Bridge Financing Facility
The 18-month bridge financing facility was arranged by Mizuho
Bank, LTD and provides Sprint with $2 billion of liquidity as the
company continues to execute its turnaround initiatives, densify
and optimize its network, and progress towards other financing
transactions in the future. The bridge facility contains a feature
that permits the company to add up to $500 million in additional
commitments.
The company is scheduled to release its fiscal year 2015 fourth
quarter and full year results on Tuesday, May 3, 2016 and will
address additional questions at that time.
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 the
transactions 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 transactions;
availability of devices; availability of various financings,
including any additional leasing 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, and, when filed, its Annual Report on Form
10-K for the fiscal year ended March 31, 2016. 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/20160429005235/en/
Media:SprintDave Tovar,
913-315-1451David.Tovar@sprint.comorInvestors:Jud Henry,
800-259-3755Investor.Relations@sprint.com
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