April 6, 2016 / 9:45 PM / 3 years ago

Sprint signs $2.2 billion deal for sale, leasing of assets

The logo of U.S. mobile network operator Sprint Corp is seen at a Sprint store in San Marcos, California August 3, 2015. REUTERS/Mike Blake

(Reuters) - Sprint Corp (S.N), the No. 4 U.S. wireless carrier, said it would raise $2.2 billion in cash through a deal for the sale and lease-back of certain network assets.

Sprint’s shares were up nearly 2 percent at $3.65 in extended trading on Wednesday.

The assets bought by bankruptcy-remote companies, or special purpose entities within Sprint, will be used as collateral to borrow the money from investors, including its majority owner, Japan’s SoftBank Group Corp (9984.T).

The assets sold under the deal are primarily equipment at cell towers, Sprint said.

The cash proceeds Sprint expects to receive from the deal are slated to be repaid in staggered, unequal payments through January 2018.

As of Dec. 31, Sprint had total liquidity of $6 billion with an additional $600 million of availability under vendor financing agreements.

The company’s total liabilities stood at $59.22 billion, while cash and cash equivalents were $2.18 billion as of Dec. 31.

Aided by SoftBank, Sprint has set up two leasing vehicles to fund handset leasing and network investments, removing those costs from its balance sheet.

Investors have worried that Sprint, which is locked in an aggressive battle for subscribers, has been burning cash at an alarming rate.

Reporting by Anya George Tharakan in Bengaluru; Editing by Maju Samuel

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