Perhaps showing the strength of the tower segment, SBA Communications raised the yield of a senior notes offering by $150 million just hours after the initial plans were announced.
The tower giant said its senior notes offering would now look to raise $800 million, which the company said it expects to use proceeds from to repay a $400 million bridge loan in connection with its recent $1.1 billion acquisition of certain assets from Mobilitie; repay the outstanding amount of its revolving credit facility; and for general corporate purposes. SBA had originally planned to raise $650 million through the note offer.
The $800 million in senior notes have a due date of 2020 and an interest rate of 5.75%, which was below the approximately 6.5% expected by Macquarie Equities Research. The analyst firm noted the lower rate could have a positive influence on SBA’s earnings per share going forward.
Standard & Poor’s Ratings Services assigned a “B+” level rating and a “4” recovery rating on the initial $650 million offering, with the recovering rating suggesting an “average” recovery in the event of a default on the unsecured notes.
Analysts have been bullish on the tower segment in recent months due to the ramp up in wireless network upgrades tied to LTE deployments. There is also strong sentiment that growth of wireless communications across international markets will lead to new opportunities for the segment.
SBA also announced last month plans to acquire privately-held TowerCo for $1.45 billion. That price includes $1.2 billion in cash and 4.6 million Class A shares valued at $250 million. TowerCo owns 3,252 sites across 47 states and Puerto Rico, and will be added to SBA’s more than 12,000 owned and 5,000 managed sites.
SBA’s stock (SBAC) was trading down just over 1% in early Wednesday trading. SBA’s stock is trading up nearly 50% from its range one-year ago.
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