- Sprint (NYSE:S) -5% premarket following the announcement of $1.2B sale-leaseback plan.
- Under the plan, a group of investors including Sprint (S) majority owner Softbank (OTCPK:SFTBF, OTCPK:SFTBY) will create a $1.2B into an entity to purchase the devices Sprint leases to customers.
- Sprint will then lease back the devices from the new venture, giving it fresh funding "at an attractive cost of capital which is well below Sprint's alternatives in the high-yield debt market."
- "Providing mobile devices to customers is the biggest use of cash in the carrier model, and with this new structure we have more closely aligned Sprint's cash flows with those associated with leasing devices to our customers," CFO Tarek Robbiati says.
- The move will boost free cash flow, but reduce 2015 Ebitda by ~$400M.
- Related: Sprint: Cost Cutting Is A Sign Of Desperation (Oct. 9)