Sprint to Get $1.1 Billion Cash Infusion
21 November 2015 - 1:50AM
Dow Jones News
Sprint Corp. said Friday it would get a $1.1 billion cash
infusion by striking a deal to sell certain devices leased to its
customers to a newly formed entity that would then rent them back
to Sprint.
The transaction essentially acts as a loan to the
telecommunication company that comes at a cheaper cost than tapping
debt markets, Sprint said.
Shares fell 1.5% in premarket trading.
The cash proceeds are part of about $1.2 billion in total
consideration slated to be exchanged for about $1.3 billion of
leased device assets.
In the wake of the deal, Sprint also revised its annual outlook
for adjusted earnings before interest, depreciation, taxes and
amortization to a range between $6.8 billion and $7.1 billion, down
from a previous forecast of $7.2 billion to $7.6 billion.
The transaction is expected to close in the first week of
December and would "immediately improve the company's liquidity
position" at a cheaper cost than bond markets, Sprint said in a
release announcing the move.
The deal also sets in place a mechanism that Sprint said helped
soften the capital impacts linked to leasing out devices to its
customers, improving its balance sheet.
"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," said Tarek Robbiati, Sprint's
financial chief.
Mobile Leasing Solutions LLC, the new entity, was formed by a
group of equity investors including SoftBank, and has secured debt
financing from several lenders, including international banks and
leasing companies.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 20, 2015 09:35 ET (14:35 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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