Sprint Lines Up Financing for T-Mobile Deal2014-06-20 16:17 by Daniela
Tags: Sprint, T-Mobile
According to recent reports, Sprint has garnered the support of eight banks willing to finance a merger with T- Mobile, which would unite the third- and fourth-biggest U.S. mobile carriers.
SoftBank will provide a bridge loan of $20 billion to Sprint in order to fund the deal. An additional $20 billion will be financed to cover the rest of the funds needed as well as refinance T-Mobile's current debt of about $9 billion. This $20 billion will come from a consortium of some of the largest global banks that include JPMorgan Chase & Co., Goldman Sachs Group Inc., Bank of America Corp. and Citigroup Inc., and some of the largest Japanese banks.
An official deal between Sprint is expected to be announced in August. T-Mobile parent Deutsche Telekom is expected to hold a 15 percent stake in the combined company, according to the report.
For Sprint, there will be some challenging regulatory hurdles to overcome till the deal is finalized. Also, if the merger falls apart due to regulatory issues, SoftBank will have to pay $2 billion to Deutsche Telekom. Deutsche Telekom is also obliged to pay $1 billion if it backs out of the deal, said a person familiar with the matter.
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