Creates a repeatable structure to sell future leased devices
Strong combination of financial and strategic parties support the
transaction
Company also amends existing Receivables Facility to include lease
receivables and expands total capacity to $4.3 billion
Company Website:
http://www.sprint.com
OVERLAND PARK, Kan. -- (Business Wire)
Sprint Corporation (NYSE:S)
signed a deal with newly formed Mobile Leasing Solutions, LLC for the
sale and lease-back of certain leased devices which is expected to
provide the company with approximately $1.1 billion in cash proceeds at
closing. The cash proceeds are part of approximately $1.2 billion in
total consideration that are expected to be exchanged for approximately
$1.3 billion of leased device assets. The transaction, which is expected
to close in the first week of December, will immediately improve the
company’s liquidity position and the funding comes at an attractive cost
of capital, which is well below Sprint’s alternatives in the high-yield
debt market. The transaction also establishes a repeatable structure for
mitigating the working capital impacts associated with leasing devices
to Sprint’s customers.
“Sprint and SoftBank have worked together to create a unique structure
that advances a very high percentage of the total value of certain
devices leased to our customers, including the device residual values,”
said Sprint CFO Tarek Robbiati. “Providing mobile devices to customers
is the biggest use of cash in the carrier model and with this new
structure we have more closely aligned Sprint’s cash flows with those
associated with leasing devices to our customers.”
Mobile Leasing Solutions, LLC was formed by a group of equity investors
including SoftBank and has secured debt financing from several lenders
including international banks and leasing companies. Brightstar Corp.
through its Financial Services Business provided support in structuring
the transaction, including assisting in the formation of Mobile Leasing
Solutions, LLC which is utilizing Brightstar's Lease Management and
Tracking System. Brightstar has also been contracted to provide reverse
logistics and device remarketing services, which will include a forward
purchase agreement that is being finalized with Foxconn, thus minimizing
the downside risk of future changes in device residual values.
Receivables Facility Amendment Provides Additional Liquidity
Sprint amended its existing Receivables Facility to include the sale of
future lease receivables, thus increasing the maximum funding limit by
$1 billion to a total of $4.3 billion. These lease receivables are
related to devices not included in the aforementioned transaction with
Mobility Leasing Solutions, LLC.
Updated Financial Outlook
The company’s previous expectation for fiscal year 2015 Adjusted EBITDA
was $7.2 to $7.6 billion. Based solely on the inclusion of
transformation program costs and the sale and lease-back of certain
leased devices to Mobile Leasing Solutions, LLC, which is accretive to
free cash flow, the company now expects fiscal year 2015 Adjusted
EBITDA* to be between $6.8 to $7.1 billion.
Conference Call and Webcast
Sprint management will host a conference call at 11:00 a.m. ET today to
discuss additional details of the transaction.
Call-in Numbers
-
Domestic: 800-938-1120 (US/Canada) – ID required: 83614827
-
International: 706-634-7849 – ID required: 83614827
Please plan on gaining access 10 minutes before the start of the call.
A simultaneous webcast will be available at www.sprint.com/investors.
Please note that questions may only be submitted through the conference
call option. Replays of the conference call will be available shortly
afterward by calling 800-585-8367 and entering the code: 83614827.
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 LeaseCo 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 LeaseCo
transaction; 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. 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 58.6 million connections as of September
30, 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151120005348/en/
Contacts:
Sprint
Media:
Dave Tovar, 913-315-1451
David.Tovar@sprint.com
or
Investors:
Jud
Henry, 800-259-3755
Investor.Relations@sprint.com
Source: Sprint
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