Sprint Corp. (S) Plans to Offer Up to $3.5B of Spectrum-Backed Notes in Private Placement

October 12, 2016 6:40 AM EDT

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Sprint Corporation (NYSE: S) announced that three wholly owned special purpose subsidiaries (the “Issuers”) have commenced an offer of up to $3.5 billion of wireless spectrum-backed notes in three series with varying maturities (the “Notes”) in a private transaction that is exempt from the registration requirements of the Securities Act of 1933 (the “Securities Act”).

The Issuers’ directly owned subsidiaries will acquire a portfolio of FCC licenses and a small number of third-party leased license agreements (the “Spectrum Portfolio”) from subsidiaries of Sprint, which comprise a portion of Sprint’s 2.5GHz and 1.9GHz spectrum holdings, representing approximately 14 percent of Sprint’s total spectrum holdings on a MHz-pops basis.

The Spectrum Portfolio is currently utilized by approximately 77 percent of all of Sprint’s 2.5GHz enabled sites and approximately 33 percent of Sprint’s 1.9GHz enabled sites. The Spectrum Portfolio will be leased back to Sprint Communications Inc. pursuant to a long-term lease agreement, the rental payments for which are sufficient to service the Notes. Based on an independent third-party valuation, the central value of the Spectrum Portfolio as of June 30, 2017, based on the various assumptions and limitations set forth in the valuation report, is approximately $16.4 billion.

The Notes are being issued pursuant to a $7 billion program established for this structure, consisting of the initial issuance and potentially future issuances, subject to certain conditions. The Notes are expected to be rated investment grade by both Moody’s and Fitch.

The consummation of the Notes offering is subject to market and other conditions and is anticipated to close in early November 2016. There can be no assurance the Notes offering will be successfully completed on the terms described herein or at all.

The Notes have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption therefrom. The Notes will be offered only to Qualified Institutional Buyers as defined in Rule 144A under the Securities Act that are also Qualified Purchasers as defined under the Investment Company Act of 1940 and to persons outside the United States that are not U.S. Persons as defined in Regulation S under the Securities Act and are also Qualified Purchasers.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the Notes and shall not constitute an offer, solicitation or sale of any Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.



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