Sprint has signed an agreement with newly formed Mobile Leasing Solutions for the sale and lease-back of certain leased devices. The operator expects the deal to deliver approximately USD 1.1 billion in cash as part of a total consideration of USD 1.2 billion. It said the leased device assets are calculated at about USD 1.3 billion.
The transaction is expected to close in the first week of December. Sprint said it will immediately improve the company’s liquidity position and the funding comes at an attractive cost of capital, which is well below alternatives in the high-yield debt market. The transaction also establishes a repeatable structure for mitigating the working capital impacts associated with leasing devices to Sprint’s customers.
Mobile Leasing Solutions was formed by equity investors including SoftBank. Brightstar’s financial services business provided support in structuring the transaction and formation of Mobile Leasing, which will use the company’s lease management and tracking system. Brightstar will also provide reverse logistics and device remarketing services, including a forward purchase agreement being finalised with Foxconn.
Sprint said that as a result of the operation, it now expects USD 6.8 billion to USD 7.1 billion of Adjusted EBITDA in 2015, compared to its earlier target of USD 7.2 billion to USD 7.6 billion. The difference represents transformation programme costs and the sale and lease-back of certain leased devices, which is accretive to cashflow. Sprint also amended its existing receivables facility to include the sale of future lease receivables, thus increasing the maximum funding limit by USD 1 billion to a total of USD 4.3 billion.
