CommScope Juiced by Debt Restructuring

Billion-dollar (market cap) telecom equipment supplier CommScope (CTV) is up $1.33, or 9.93%, at $14.74 after the company announced this morning it will make a prepayment on its 1% senior subordinated loans due 2024.

CommScope had $200 million of the notes as of the end of the most recent quarter, but it still has another $1.8 billion or so of debt on the books and roughly $500 million, as of its most recent filing.

Part of what’s no doubt juicing the stock is the fact that the terms of the loans have been revised to allow the company a lower the amount it needs to have in cash flow to cover the loans in future years, thereby giving the company a bit more breathing room in its operations quarter to quarter.

The specific language goes,

Providing that future optional prepayments of term loans during any fiscal year will reduce the excess cash flow prepayment requirement for such fiscal year (1) by 75% of the amount of such optional prepayments.