April 29, 2016
Sprint Improves Liquidity by More Than $3 Billion with Two New Transactions
Second Mobile Leasing Solutions, LLC transaction provides $1.1 billion of funding
New bridge financing facility of $2 billion
Company has added more than $5 billion of liquidity in April
OVERLAND PARK, Kan. (BUSINESS WIRE), April 29, 2016 - Sprint Corporation (NYSE:S) signed its second deal with Mobile Leasing Solutions, LLC (MLS) for the sale and lease-back of certain leased devices. Arranged by Mizuho Securities, Co., LTD, this transaction is expected to provide the company with approximately $1.1 billion in cash proceeds. In a separate transaction, the company signed an 18-month bridge financing facility arranged by Mizuho Bank, LTD, providing $2 billion of additional liquidity. These transactions, in addition to the $2.2 billion of network-related financing that was announced earlier this month, have improved the company’s liquidity position by more than $5 billion in April.
Second MLS Transaction
By executing its second transaction with MLS, Sprint continues to help mitigate the working capital impacts associated with leasing devices to its customers. The company sold approximately $1.3 billion of leased device assets for approximately $1.1 billion of cash proceeds, which the company expects to receive in the coming weeks, and $186 million of contingent deferred consideration.
In contrast with the first MLS transaction, this sale lease-back arrangement will be accounted for as financing (on-balance sheet). Accordingly, the assets will remain in Property, Plant, & Equipment and will continue to be depreciated over their remaining useful lives. The payments made to MLS under the lease-backs will be reflected as principal repayments and interest expense over the respective terms. Future changes in the fair value of the financing obligation will be recognized in earnings over the course of the arrangement.
MLS was formed by a group of equity investors including SoftBank and has obtained debt financing from several lenders including leasing companies and international and domestic banks. As with the first transaction, Brightstar Corp is providing its lease management and asset tracking system, as well as reverse logistics and device remarketing services. Also consistent with the first transaction, MLS executed a forward purchase agreement with Foxconn, which helps reduce the downside risk of future changes in device residual values.
Bridge Financing Facility
The 18-month bridge financing facility was arranged by Mizuho Bank, LTD and provides Sprint with $2 billion of liquidity as the company continues to execute its turnaround initiatives, densify and optimize its network, and progress towards other financing transactions in the future. The bridge facility contains a feature that permits the company to add up to $500 million in additional commitments.
The company is scheduled to release its fiscal year 2015 fourth quarter and full year results on Tuesday, May 3, 2016 and will address additional questions at that time.
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 transactions 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 transactions; 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, and, when filed, its Annual Report on Form 10-K for the fiscal year ended March 31, 2016. 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.
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.