Sprint, T-Mobile merger backed with $38 billion of loans

LONDON (LPC) - T-Mobile US TMUS.O, Deutsche Telekom’s US unit, is backing its US$26bn takeover of Sprint Corp S.N with US$38bn of fully committed loans, the company said.

Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and RBC are providing the debt.

The financing comprises a US$4bn secured revolving credit facility (RCF), a US$7bn secured term loan B, a US$19bn two-year secured bridge loan and an US$8bn unsecured high-yield bridge.

The merger will see T-Mobile US return to a standalone funding model, with US$8bn of Deutsche Telekom shareholder loans being repaid at close as well as the cancellation of a US$2.5bn RCF.

The remaining US$6.6bn of Deutsche Telekom DTEGn.DE held debt will be redeemed over time.

Pro forma net leverage on the merger is expected to be around 2.9 times, with rapid deleveraging to less than 2.0 times in three to four years.

There is an anticipated corporate rating of mid to high BB, an unsecured bond rating of low to high BB and a secured debt rating of low BBB.