Fitch Ratings has assigned a 'BB+' rating to American Tower
Corporation's (AMT) proposed $325 million incremental senior term loan
maturing in 2012. Proceeds from the term loan will be used to refinance
existing indebtedness under the revolving facility. The Rating Outlook
is Stable.
AMT's ratings reflect the scale in its operations, which has translated
into strong operating performance and increased free cash flow. AMT's
operating characteristics remain favorable and are reflective of the
lower business risk that results in a predictable and growing cash flow
stream generated largely from investment grade national wireless
operators. Fitch believes these characteristics more than offset AMT's
sizable share repurchase program and the higher financial leverage for
its rating category. AMT should continue to meaningfully improve its
operating metrics due to scale benefits and the expectations for
continued wireless industry demand. Over the longer-term, Fitch expects
that AMT, as well as the rest of the tower industry, will benefit from
the build-out requirements associated with the 700 MHz auction.
AMT's liquidity position is solid owing to its free cash flow (FCF),
cash on hand and undrawn revolver capacity. FCF for the last twelve
months was in excess of $500 million. For 2008, with higher capital
spending expected for land purchases, new tower construction and
augmentation of existing sites, Fitch believes FCF levels will be
comparable to 2007. Cash and cash equivalents, including restricted
cash, was $87 million as of Dec. 31, 2007. Proforma for the new
incremental term loan, which will provide AMT with additional liquidity,
the company had drawn approximately $650 million of the $1.25 billion on
its senior unsecured revolving credit facility that matures in 2012. The
financial covenants for the new term loan are the same as the existing
revolver, which includes the following: total senior secured leverage
ratio of 3.0 times (x), total borrower leverage ratio of 6.0x and
interest coverage ratio of 2.5x. The senior secured leverage covenant of
3.0x provides AMT with additional capacity for future tower
securitizations.
Fitch expects the majority of excess cash flow, borrowings under its
revolving credit facility and cash on hand will be used to repurchase
shares. Under the previous stock repurchase program that expired in
February 2008, AMT purchased 35 million shares of common stock for $1.5
billion. AMT's Board of Directors approved a new stock repurchase
program to purchase up to an additional $1.5 billion of its class A
common stock. As a result, debt will increase moderately over the next
couple of years. For 2007, debt increased by $700 million to $4.3
billion. Based on current capital allocation plans, Fitch expects debt
to increase by at least $400 million in 2008 with leverage likely
staying in the mid-4x range. AMT's near-term debt maturities are
relatively modest over the next three years with only $78 million of
convertible debt from two issuances due in 2010.
Fitch's rating definitions and the terms of use of such ratings are
available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality, conflicts
of interest, affiliate firewall, compliance and other relevant policies
and procedures are also available from the 'Code of Conduct' section of
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