The 4th largest wireless carrier in the US, Sprint, is selling some of its assets to increase its borrowing powers to $2.2 billion. he network will then lease back the assets through its network properties.
Sprint, through its special purpose entities, will be bought by bankruptcy-remote companies which will then be used as a collateral for it to borrow money from investors including SoftBank Group Corp. of Japan as per Reuters.
According to the Business Wire, Sprint and SoftBank have worked together to create a unique structure that will provide an attractive source of the company's capital. According to CFO Tarek Robbiati, the company will focus on corporate transformation but will have to address upcoming maturity debts. The company will be involved in the growing top line revenues and will take the cost out in order to increase the operating cash flow.
Certain existing assets of the company will be acquired by Network LeaseCo and then lease it back to Sprint. The assets that LeaseCo will acquire will also be used as a collateral for it to raise $2.2billion worth of credit from external investors. Sprint will receive the outflows through staggered unequal payments until January 2018. Sprint said that most of the assets that will be included in the deal are cell towers.
As reported by the Sonoran Weekly Review, Sprint has set up two leasing vehicles which are all aided by SoftBank to fund handset and leasing investments which will eventually remove the cost from the company's balance sheet. The company's stocks, on the other hand, has risen to 2.5% after the company announced the deal it had with those bankruptcy-remote entities.
Sprint had a total market value of $6 billion plus the $600 million fund which is available under the vendor financing agreements. The company's total liabilities, however, is at $59.22 billion as of December 31. It has been the concern of most investors that the company has been throwing money out of the window when it was locked in an aggressive battle to gain subscribers.
