Sprint In $2.2 Bln Deal For Sale & Lease-back Of Certain Existing Network Assets

(RTTNews) - Sprint Corp. (S) said that it entered into a transaction with several bankruptcy remote entities or "Network LeaseCo" for the sale and leaseback of certain existing network assets, which is expected to close next week and provide the company with $2.2 billion of funding.

When closed, the transaction will immediately improve the company's liquidity position at an attractive cost of capital in the mid-single digits.

Network LeaseCo will acquire certain existing network assets and then lease them back to Sprint. The assets acquired by Network LeaseCo will be used as collateral to raise approximately $2.2 billion in borrowings from external investors, including SoftBank. The $2.2 billion of cash proceeds Sprint expects to receive from the transaction is scheduled to be repaid in staggered, unequal payments through January 2018.

For accounting purposes, Sprint will consolidate Network LeaseCo and Sprint's consolidated financials will reflect the cash proceeds it receives and the underlying debt of Network LeaseCo. The network assets involved in the transaction, which have a net book value of approximately $3 billion and consist primarily of equipment located at cell towers, will remain on Sprint's consolidated financial statements and will continue to be depreciated. In addition, Sprint will record interest expense incurred in connection with the debt of Network LeaseCo.