Sprint said it’s set to gain new liquidity through the sale of device leasing obligations and a short-term bank financing deal, as it looks to bolster financial picture
Sprint is set to receive more than $3 billion in new liquidity tied to its device leasing entity and a short-term financing deal with a Japan-based bank.
Sprint said it was set to receive $1.1 billion in cash proceeds from its Mobile Leasing Solutions subsidiary, which was created last year and tasked with handling the financial aspects of Sprint’s device leasing program in which the carrier provides devices to consumers for a monthly fee over a fixed term before exchanging that device for a new model. Sprint managed to squeeze $1.1 billion out of its first payments from MLS, which the carrier said came in below costs associated with “alternatives in the high-yield debt market.”
In this second installment, Sprint noted similar terms to the first deal with the company selling approximately $1.3 billion of leased device assets for approximately $1.1 billion in cash proceeds, which the company said it expects to receive in the coming weeks, and $186 million of contingent deferred consideration. The carrier noted the latest move will be accounted for as financing, or “on-balance sheet,” the assets will remain in “property, plant and equipment” and will be depreciated over their remaining useful lives.
The 18-month bridge financing deal was signed with Mizuho Bank and is set to provide $2 billion in liquidity, which the carrier said would allow it to continue “to execute its turnaround initiatives, densify and optimize its network and progress towards other financing transactions in the future.” The deal also includes the ability for Sprint to add up to $500 million in additional commitments.
The latest financing moves follow on the heels of Sprint and parent company SoftBank earlier this month setting up the Network LeaseCo subsidiary, which provided Sprint with $2.2 billion in financing by acquiring $3 billion worth of live network equipment.
In total, Sprint said this string of deals will improve its overall financial position by more than $5 billion. Published reports have indicated Sprint’s current outstanding debt stood at around $34 billion, which is more than twice its current market capitalization, and the need to meet $2.3 billion in debt payments this year.
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