(The following statement was released by the rating agency)
CHICAGO, October 31 (Fitch) Fitch Ratings has assigned ratings
to American Tower
Corporation's (AMT) debt as follows:
--Senior unsecured $1.5 billion term loan due 2019 rated 'BBB';
--Senior unsecured $1 billion 364-day revolving credit facility
due Sept. 19,
2014 rated 'BBB'.
The 'BBB' rating on AMT's senior unsecured $750 million term
loan due 2017 has
been withdrawn as it has been repaid by proceeds from the term
loan due 2019.
The Rating Outlook remains Stable.
Proceeds from the $1.5 billion term loan plus cash on hand were
used to repay
$800 million of outstanding revolver borrowings and repay the
$750 million term
loan due 2017.
KEY RATING DRIVERS
The ratings and Outlook reflect Fitch's expectations that AMT
will delever over
the next two years following the $4.8 billion acquisition
debt) on Oct. 1, 2013 of MIP Tower Holdings LLC, which is the
parent of Global
Tower Partners (GTP). AMT, following the acquisition, is
expected to continue to
post strong free cash flows (FCF), generate mid- to high- single
growth and maintain stable margins. While pro forma leverage at
the close of the
transaction approximated 5.8x, Fitch believes organic EBITDA
with debt repayment will enable the company to reduce leverage
on a quarterly
annualized basis to below 5x within a 12 to 18 month period.
AMT's gross leverage ratio will decline to approximately 5.3x to
5.4x by the end
of 2014 and to 4.7x by 2015.
The ratings are also supported by the growth inherent in the
business model and management's strong public statements that it
delever over the next 12 to 18 months to within its net leverage
target of 3x to
5x. Tower revenues are predictable and contractual escalators
strong prospects for additional business provide for growth.
generated primarily from non-cancellable long-term lease
contracts with national
wireless operators, of which several are investment-grade. AMT,
and the tower
industry as a whole, are benefiting from wireless carriers
fourth generation (4G) networks to supply rapidly growing demand
broadband services. Similar trends are occurring internationally
data services at a much earlier stage of development than in the
On Oct. 1, 2013, AMT completed the acquisition of GTP for $4.8
assumed debt. GTP was the largest independent, privately owned
tower operator in
Strategically, GTP materially expands AMT's domestic footprint
approximately 5,400 towers and rights to an additional 9,000
Approximately 70% of GTP's revenues are produced by the four
operators and approximately two-thirds of its operations are in
the top 100
The ratings also take into account AMT's real estate investment
status. Fitch believes AMT will retain significant flexibility
to manage its
leverage as a REIT even though it will be required to distribute
of REIT earnings to shareholders.
U.S. wireless consolidation is not expected to have a material
effect on AMT's
operations. Revenue growth from continued lease activity and
escalators in the U.S market will more than offset the
relatively modest losses
that may occur over time due to consolidation.
AMT has maintained a strong liquidity profile upon the close of
transaction. Following the repayment of $800 million in revolver
cash on hand and unused revolver capacity approximate $2.6
liquidity improving as acquisition-related borrowings are
reduced. In addition
to entering into the 364-day revolving credit facility due in
the company exercised the accordion feature of its revolving
credit facility due
2018, expanding its capacity by $500 million to $2 billion.
Operationally, cash flow generation should remain strong. For
the LTM ending
Sept. 30, 2013, FCF (cash provided by operating activities less
and dividends) was approximately $408 million. For 2013, Fitch
FCF will be in the $535 million to $585 million range.
The principal financial covenants limit total debt to adjusted
defined in the agreements) to no more than 6.5x until Sept. 30,
2014 and 6.0x
thereafter and senior secured debt to adjusted EBITDA to 3.0x
for the company
and its subsidiaries. An amendment arising from the GTP
increased the maximum leverage ratio to 6.5x from 6.0x. If debt
below a specified level at the end of any fiscal quarter, the
ratio of adjusted
EBITDA expense must be no less than 2.5x for as long as the
ratings are below
the specified level. The next material maturity consists of $600
senior unsecured notes due in 2015.
At the current 'BBB' level, Fitch's sensitivities do not
developments with a material likelihood leading to a rating
A negative rating action could occur if:
--operating performance falls short of expectations of
mid-single digit organic
growth combined with margin pressure;
--a significant leveraging transaction that delays anticipating
lead to a downgrade.
John C. Culver, CFA
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 5, 2013);
--'Rating Telecom Companies - Sector Credit Factors' (Aug. 9,
--'Criteria for Rating U.S. Equity REITs and REOCs' (Feb. 26,
Applicable Criteria and Related Research:
Corporate Rating Methodology: Including Short-Term Ratings and
Rating Telecom Companies
Criteria for Rating U.S. Equity REITs and REOCs
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