Sprint signs $1.2 billion deal for the sale & lease-back of certain leased devices to newly formed Mobile Leasing Solutions, ...
November 20 2015 - 7:31AM
Business Wire
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
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20151120005348/en/
SprintMedia:Dave Tovar,
913-315-1451David.Tovar@sprint.comorInvestors:Jud Henry,
800-259-3755Investor.Relations@sprint.com
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