American Tower extends debt payment runway as part of bond deals

Company expects to generate $1.77 billion in proceeds as part of new offering

American Tower Corp. (NYSE:AMT) will extend its debt-payment runway and generate bonus liquidity following a bond redemption and a new $1.77 billion offering at a lower rate as the company increases focus on acquisitions. 

However, the towerco is also pursuing increasingly complex financing while facing a rising debt load. 

The company will offer senior unsecured bonds in tranches due in 2026, with $600 million at 1.45% interest; 2031, with $700 million at 2.3%; and 2051, with $500 million. The 2051 notes will be consolidated to form a single series and fully fungible with its outstanding $550 million, 2.95% senior unsecured notes due 2051, which were issued Nov. 20, 2020. 

Barclays, BBVA, Mizuho Securities, RBC Capital Markets and TD Securities are acting as joint book-running managers for the offering, according to the announcement.

Earlier in September, American Tower had said it would redeem its 4.7% notes with aggregate value of $700 million on Oct. 18, at a price equal to principal plus a make-whole premium along with accrued and unpaid interest. They are due March 15, 2022.

American Tower will also use the proceeds of the new offering to repay a $1 billion unsecured term loan, as well as for general corporate purposes. The company declined to comment. 

Buys, liabilities rise  

American Tower has seen liabilities soar recently following the January acquisition of European tower company Telxius for about $9.3 billion through a roughly 50-50 mix of debt and equity. It closed the first tranche of the acquisition on June 1, adding nearly 20,000 tower and rooftop sites in Germany and Spain for $7.6 billion.  

American Tower CEO Thomas Bartlett has announced acquisitions worth $13 billion in aggregate since taking the helm in March 2020. 

The company recently increased the size of its multicurrency unsecured revolver to $4.1 billion from $3.1 billion and the size of its senior unsecured revolver to $2.9 billion from $2.35 billion. It also extended the maturities on both facilities by one year, to June 2024 for the multicurrency facility, and to January 2026 for the senior unsecured revolver. 

In Q2 2021, American Tower’s cash on its balance sheet went up 10.5%, to $1.928 billion, compared with the end of 2020, according to its most recent 10-Q statement. 

However, the company’s current liabilities were up almost 63%, to $5.95 billion, compared with those at the end of 2020, also according to the filing. Total liabilities increased 22% during the same period to almost $52 billion. 

American Tower’s growth strategy centers in part on acquiring and building real estate assets to drive organic growth in international markets, Bartlett said on the company’s Q2 2021 earnings call. In addition to Europe, the company has operations in Brazil and Mexico. 

Markets outside the U.S. have made meaningful contributions to our long track record of generating strong organic growth, while delivering double-digit annual consolidated [adjusted funds from operations] per-share growth and attractive returns on invested capital,” Bartlett said. 

A key goal is to build 40,000 to 50,000 towers worldwide during the next five years. Mobile network operators across international markets are spending upwards of $35 billion in wireless capex annually, meaning that the need for communications infrastructure is expanding.  

American Tower faces $1.034 billion in 2022 liabilities, according to the 10-Q statement. In addition to the unsecured term loan and the 4.7% notes, it also faces $1.3 billion in borrowings under the 2021 364-Day Delayed Draw Term Loan, which helped fund the Telxius deal, and $600 million in 2.25% senior unsecured notes due Jan. 15, 2022, the filing shows. 

On June 30, American Tower had three interest rate swap agreements related to the 2.25% senior unsecured notes. Designated as fair value hedges, the swaps carry an interest rate of one-month LIBOR plus applicable spreads, and will expire in January 2022. 

The company ended the Q2 2021 with net leverage of 5.7x, CFO Rod Smith said on the earnings call. However, he expects that metric to trend down into the mid-5x range after recently closing stake sales with Germany-based financial firm Allianz (FWB:ALV) and Canada investment firm Caisse de depot et placement du Quebec (CDPQ). Allianz will acquire a 10% stake in ATC Europe — American Tower’s European unit — for an unknown amount, and CDPQ will receive a 30% stake for $1.87 billion. 

Rival towerco Crown Castle International Corp. (NYSE: CCI) announced June 15 that it has priced a public offering of 2.5% senior notes due 2031. In January, SBA Communications Corp. (NASDAQ: SBAC), also a rival, announced that it has priced an offering of $1.5 billion aggregate principal amount of 3.125% senior notes due 2029.  

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