RESTON, Va.-Sprint Nextel Corp. said it entered into a new 5-year, $6 billion revolving credit facility and a new 364-day $3.2 billion term loan. The new credit facilities replace Nextel Communications Inc.’s previous $4 billion revolving credit facility and $2.2 billion term loan.
Sprint Nextel said the new term loan will be used to refinance the outstanding term loan and revolving credit loan under the Nextel facility, with the revolving credit facility available for future borrowings and to support letters of credit.
Sprint Nextel also announced plans to terminate its two accounts-receivable securitization facilities, which the carrier said provide up to $1.2 billion in additional borrowing capacity. Sprint Nextel explained that its existing 364-day $1 billion revolving credit facility will remain in place, and that its available liquidity has increased to around $2 billion.
The new revolving credit facility and $6 billion commitment are expected to remain available until final maturity in 2010. The carrier added that its existing $2.5 billion letter of credit issued earlier this year in accordance with the Federal Communications Commission’s 800 MHz Report and Order remains outstanding with the same eight issuing banks and supported by the new revolving credit facility.
“Our company’s strong financial results, positive credit ratings trajectory and favorable bank market conditions combined to produce exceptional demand for our new facility,” said Paul Saleh, Sprint Nextel’s chief financial officer. “We are enhancing our liquidity while at the same time reducing our interest rates, extending the maturity of our revolver and improving our operating flexibility.”
Sprint Nextel noted that at closing it had borrowed all $3.2 billion of the new term loan to repay the outstanding balance of the existing $2.2 billion term loan A and $1 billion revolving credit facility under the Nextel facility. The carrier said it expects to realize annual savings of approximately $18 million, based on current debt ratings and assuming consistent borrowing levels.
Sprint Nextel’s stock was trading up 35 cents per share early Monday at $24.88.
