Sprint Says $6.5 Billion Junk Sale May Trigger Loan DefaultTom Freke
Sprint Corp.’s $6.5 billion bond sale yesterday, the biggest high-yield offering since 2008, may result in the company breaking terms of its loans.
The increase in the company’s debt may breach compliance tests on three credit facilities to its Sprint Communications unit, according to a company filing. It can avoid a default by getting “waivers from our lenders, reduce our outstanding indebtedness or otherwise eliminate our need to comply with Sprint Communications’ credit facility covenants,” it said.
Sprint is in talks with lenders that provided a revolving credit facility, a type of debt where money repaid can be borrowed again, to get a waiver on the covenants. The company said it will also seek to reach an agreement with lenders of the other two facilities as a breach of the loan terms may result in cross defaults of other debt.
“We fully expect to get the required waivers and anticipate having sufficient cash on hand to repay and terminate the facilities if we do not,” Scott Sloat, a spokesman for Sprint, said in an e-mailed response to questions.
Sprint, based in Overland Park, Kansas, was acquired by Japan’s SoftBank Corp. in July for $21.6 billion. It said Sept. 4 it intends to use the proceeds from the new notes for “general corporate purposes, which may include, among other things, redemptions or service requirements of outstanding debt and network expansion and modernization.”