US operator Sprint Nextel has closed its US$3.1bn convertible bond with Softbank pursuant to the merger agreement between the two companies agreed earlier this month.
Under the terms of the deal Softbank can convert the seven-year 1% notes into 590…
US operator Sprint Nextel has closed its US$3.1bn convertible bond with Softbank pursuant to the merger agreement between the two companies agreed earlier this month.
Under the terms of the deal Softbank can convert the seven-year 1% notes into 590 million shares of Sprint common stock. This represents approximately 19.65% of the current outstanding shares.
The US$3.1bn bond marks the first payment by Softbank towards its US$20.1bn acquisition of Sprint. The Japanese group will pay the remaining US$17bn for the 70% stake further down the line once the deal has been approved.
Of that leftover sum US$12.1bn will be paid to Sprint shareholders for roughly 55% of the current stock, equalling a US$7.30 per share payment.
Furthermore, the Japanese company will use US$4.9bn to purchase newly issued Sprint common shares at US$5.25 per share. Combined with the proceeds of the convertible bond this will add US$8bn of capital on to the US operator’s balance sheet – money that could be used by the operator for spectrum buys, network upgrades or acquisitions for instance.
Following the Softbank agreement Sprint recently increased its stake in Clearwire from 48.1% to 50.8% after buying out founder Craig McCaw for US$99.5m. In spite of achieving a majority, this did not give Sprint control over the wireless broadband company.
Currently, executive changes and other major decisions require approval by at least 10 board members. Sprint has seven out of the 13 seats.
Softbank and Sprint expect their deal to close in mid-2013.
