Leap Wireless International Inc., which recently emerged from bankruptcy protection that allowed the carrier to cut more than $2 billion in debt, said it expects to spend between $28 million and $33 million expanding its Cricket service to the Fresno, Calif., market by the end of next year.
The network launch, which will also include expansion of the carrier’s Visalia and Modesto/Merced, Calif., networks, will double its current coverage from around 1 million potential customers to approximately 2 million pops in California’s Central Valley. The launch will include between $20 million and $25 million in capital expenditures and less than $8 million in additional cash requirements. The market expansion will take advantage of Leap’s previously announced $27.1 million acquisition of 30 megahertz of spectrum from Alpine-Fresno C L.L.C., which was announced in August.
“We expect the addition of Fresno to yield improved operational performance within this cluster of markets by allowing us to more effectively serve our customers up and down the Central San Joaquin Valley,” said Bill Freeman, chief executive officer of Leap. “We firmly believe that the expansion strategy represented by the addition of Fresno is the right strategy for the business going forward, and we intend to carefully and selectively review other opportunities as we continue to solidify our market position.”
Leap also reported that its Cricket Communications Inc. subsidiary is launching the syndication of $650 million of senior secured credit facilities, consisting of a five-year, $150 million revolving credit facility and a six-year, $500 million term loan.
Borrowing under the term loan facility will be used to redeem Cricket’s existing $350 million 13-percent senior secured notes, to pay approximately $42 million of call premium and accrued interest on the notes, to repay approximately $41 million in principal amount of debt and accrued interest owed to the Federal Communications Commission, and to pay associated transaction fees and expenses.
Freeman explained that the proposed refinancing of the 13-perent senior secured notes would reduce total interest expense and provide the company with “additional financial flexibility appropriate for a wireless company of our size.” Leap added that the term loan would provide the company with $57 million in additional proceeds for general corporate purposes, including working capital and potential acquisitions.
“The company expects that these facilities will strengthen our bottom line net income position as we continue to improve our financial performance while supporting the measured and strategic expansion of our business,” Freeman noted.
