Sprint Nextel Reaches $1 Billion Credit Agreement for Equipment Financing

[jhman101]

What are your opinions on this? Do you think this will help speed up the pace of Network Vision?

 

http://newsroom.spri...article_id=2294

• 29 May 2012
   
  Sprint Nextel Reaches $1 Billion Credit Agreement for Equipment Financing
   
   
  OVERLAND PARK, Kan. (BUSINESS WIRE), May 29, 2012 - Sprint Nextel (NYSE: S) announced today that it has entered into a new $1 billion credit facility with Deutsche Bank and a syndicate of other banks to finance equipment purchases from Ericsson (NASDAQ:ERIC) for Network Vision. The borrowers under the secured credit facility are all of Sprint’s subsidiaries that currently guarantee Sprint’s revolving bank credit facility, and the obligations will be secured by a lien on the equipment purchased from Ericsson in connection with Network Vision and guaranteed by Sprint.
  The secured credit facility expires in March 2017 and benefits from a cost of funding of approximately 6 percent provided by AB Svensk Exportkredit and comprehensive insurance cover from EKN, the Swedish Export Credit Agency. Deutsche Bank acted as one of the Mandated Lead Arrangers and as Facility Agent.
  The covenants under the secured credit facility are similar to those of Sprint’s revolving bank credit facility and those of the guaranteed Notes due 2018 and the guaranteed Notes due 2020.
  

[Rickie546]

What are your opinions on this? Do you think this will help speed up the pace of Network Vision?

 

http://newsroom.spri...article_id=2294

• 29 May 2012
   
  Sprint Nextel Reaches $1 Billion Credit Agreement for Equipment Financing
   
   
  OVERLAND PARK, Kan. (BUSINESS WIRE), May 29, 2012 - Sprint Nextel (NYSE: S) announced today that it has entered into a new $1 billion credit facility with Deutsche Bank and a syndicate of other banks to finance equipment purchases from Ericsson (NASDAQ:ERIC) for Network Vision. The borrowers under the secured credit facility are all of Sprint’s subsidiaries that currently guarantee Sprint’s revolving bank credit facility, and the obligations will be secured by a lien on the equipment purchased from Ericsson in connection with Network Vision and guaranteed by Sprint.
  The secured credit facility expires in March 2017 and benefits from a cost of funding of approximately 6 percent provided by AB Svensk Exportkredit and comprehensive insurance cover from EKN, the Swedish Export Credit Agency. Deutsche Bank acted as one of the Mandated Lead Arrangers and as Facility Agent.
  The covenants under the secured credit facility are similar to those of Sprint’s revolving bank credit facility and those of the guaranteed Notes due 2018 and the guaranteed Notes due 2020.
  

 

No, I think this just secures that the project will finish fully now with no problems.

[xenadu]

They were perusing vendor financing and other debt deals to keep their existing credit lines and cash flow available if possible. IMHO this should give them added flexibility to deal with unexpected charges or even do an acquisition if the timing is right since they won't have all their cash stuck in NV.

[aerxx]

All this makes me think about is a possible monthly bill increase.....

[irev210]

No, I think this just secures that the project will finish fully now with no problems.

 

It's only a billion with ericsson - they need more vendor financing still.

 

They were perusing vendor financing and other debt deals to keep their existing credit lines and cash flow available if possible. IMHO this should give them added flexibility to deal with unexpected charges or even do an acquisition if the timing is right since they won't have all their cash stuck in NV.

 

This is very vague and incorrect. The financing aspect of network vision has always depended on heavy borrowing and vendor financing.

 

 

All this makes me think about is a possible monthly bill increase.....

 

Sprint has publicly said that they are currently maxed out on additional fees/charges/etc. They've even gone as far as to shave two weeks off your two year upgrade cycles. They are really at the end of their rope in terms of adding additional revenue per customer (edit: to clarify, ARPU will still increase but as a result of these changes- not new ones - it takes time to trickle down).

 

 

At the end of the day, this is about just using all of the financial tools in the toolbox to achieve the lowest borrowing costs possible.

 

As you can see, they used the Swedish export bank to help achieve low rates (the US has an export bank as well, Boeing is a big fan).

 

Basically, the debt is secured against Ericsson's own hardware equipment. If sprint were to not pay, sprint would essentially have to give the hardware to creditors (a very strong incentive to pay your bills).

 

Sprint's financing cost of 6% on this is much lower than the ~10% or so that they would have to pay on the open market.

 

Ideally, sprint customers would like to see similar terms from Acatel Lucent and Samsung over the coming months.

[S4GRU]

 

Sprint has publicly said that they are currently maxed out on additional fees/charges/etc. They've even gone as far as to shave two weeks off your two year upgrade cycles. They are really at the end of their rope in terms of adding additional revenue per customer.

 

At the end of the day' date=' this is about just using all of the financial tools in the toolbox to achieve the lowest borrowing costs possible.

 

As you can see, they used the Swedish export bank to help achieve low rates (the US has an export bank as well, Boeing is a big fan).

 

Basically, the debt is secured against Ericsson's own hardware equipment. If sprint were to not pay, sprint would essentially have to give the hardware to creditors (a very strong incentive to pay your bills).

 

Sprint's financing cost of 6% on this is much lower than the ~10% or so that they would have to pay on the open market.

 

Ideally, sprint customers would like to see similar terms from Acatel Lucent and Samsung over the coming months.[/quote']

 

Excellent post. Thanks.

 

Robert via Kindle Fire using Forum Runner

[irev210]

Excellent post. Thanks.

 

Robert via Kindle Fire using Forum Runner

 

For additional color on "import/export banks" you can read about the recent extention of our own in the WSJ

 

Search "Obama Signs Bill Reauthorizing Export-Import Bank" to get around the WSJ paywall.

 

The Export-Import Bank helps U.S. exporters by offering financing assistance to foreign buyers of their products, often at better terms than those commercially available. The mandate for the bank was set to expire at month's end, and Congress approved reauthorization after lobbying campaigns by companies for and against it.

Exporters such as Boeing Co. BA -0.06% and General Electric Co. urged Congress to expand the bank's lending powers, while companies like Delta Air Lines Inc. pushed back, saying the bank subsidizes foreigners that compete with U.S. companies.

 

 

 

You can read more about EKN here:

http://www.ekn.se/en/Om-EKN/Our-business/

 

and here:

http://www.alide.org.pe/ingles-2010/sf11_ext_reuSek.asp