updated 05:30 pm EDT, Fri November 4, 2011
Sprint looking to sell debt to raise funds
Sprint has announced a plan to offer notes due in 2018 and 202. It says that is 2018 offer will be guaranteed by the company’s wholly-owned subsidiaries its existing credit arrangements. The company will be selling off its debt in order to raise finances to help fund Clearwire to keep it afloat. While the company has not said how much it hopes to raise in the note offer, it said on October 26 that may need to raise as much as $7 billion to upgrade its own network and help pay for the high cost of its deal with Apple to sell the iPhone.
Clearwire, which remains majority owned by Sprint, needs around $300 million to fund its operations as well as another $600 million for network upgrades that it needs to help it compete with rivals and win additional wholesale customers.
The move comes as Sprint seeks to shore up Clearwires fortunes. It had triggered a collapse in the Clearwire’s shares when it said on October 7 that it would stop selling phones using Clearwire’s service at the end of 2012 and that its potential bankruptcy could be ‘constructive.’ Its latest move has helped Clearwire’s shares to rebound.
Sprint is not without its own difficulties. Standard & Poor has downgraded the company’s credit rating from B+ to BB-, which will increase its costs of borrowing money in the future. [via Reuters]