MetroPCS Communications raked in about $1.4 billion worth of new spectrum at the Federal Communications Commission's September auction and turned to Bear Stearns, Merrill Lynch and Bank of America to finance the purchase.
Launched at a bank meeting last Wednesday, the new facility consists of a $100 million revolver and a $1.4 billion term loan. Pricing on both tranches is LIBOR plus 2 3/4%. Leverage is four times on the term loan and there is a fixed-charge coverage ratio covenant that comes into play when leverage rises above a certain level that has yet to be determined, according to a banker. The company has $1.1 billion of bonds coming as well, the banker said.
Within the wireless communications provider's new bundle of spectrum are areas including New York City and Long Island, Detroit, Dallas and Las Vegas. Moody's Investors Service rated the credit B1 and Standard & Poor's rated the credit B, according to a banker.
MetroPCS locked up a $550 million greenshoe provision from Bear Stearns back in December. The bank obtained lender consent to put the provision into place and concurrently draw on an existing $150 million greenshoe that was priced over par for existing lenders. The $550 million loan made a $330 million first lien and a $220 million second lien available to the company. Lenders that consented could purchase the first lien at 101 3/4 and the second lien for 102, below where existing tranches were trading. At the time market players thought this may have been a first for the bank market (CIN, 12/19).
In May 2005, Bear Stearns originally took a $950 million deal broken into a $700 million first-lien tranche and a $250 million second lien to market. It was priced at LIBOR plus 3 3/4% on the first lien and LIBOR plus 5 3/4% on the second (LMW, 5/9/2005). The reception was lukewarm and the initial deal was dropped to a $500 million first lien priced at LIBOR plus 4 1/2%; the $250 million second lien priced at LIBOR plus 7%. The company then asked for the $150 million greenshoe for use when it had more favorable numbers (12/15/2005). Calls to a MetroPCS spokesman were not returned.