Attractive cost of funding in mid-single digits
Company Website:
http://www.sprint.com
OVERLAND PARK, Kan. -- (Business Wire)
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160406006393/en/
Contacts:
Sprint
Media Contact:
Dave Tovar, 913-315-1451
David.Tovar@sprint.com
or
Investor
Contact:
Jud Henry, 800-259-3755
Investor.Relations@sprint.com
Source: Sprint Corporation
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