Wireless broadband service provider Wirefree Partners LLC is shopping a $138.5 million securitization of distribution licensing payments due the company from Sprint Nextel Corp. over at least the next 10 years. The series 2005-1 transaction, offered via lead manager Lehman Brothers, will go to repay Wirefree's borrowings that were used to fund its $150.2 million bid under the Federal Communications Commission's Auction 58, which took place in February.
Auction 58 allowed entrepreneurial enterprises to license wireless communication services to large telecom entities, such as Sprint. The FCC defines entrepreneurial enterprises as those with revenues less than $125 million and total assets less than $500 million, according to the posted description of Auction 58 on the FCC's Web site.
The transaction, rated BBB+' by Fitch Ratings and A-' by Standard & Poor's, is in line with Sprint Nextel's respective senior unsecured debt ratings. Moody's Investors Service, which rates Sprint Nextel Baa2' did not rate the offering, nor did Dominion Bond Rating Service, which does not rate the corporate entity.
The offering, with a 14-year legal final maturity, was being shopped last week in the 90 basis point area over swaps, sources reported, with pricing expected this week.
With Wirefree's winning bid, financed via a loan provided by an undisclosed entity, the FCC allows it to lease wireless services to Sprint Nextel, which in turn, will distribute them to more than 17.9 million customers in 16 cities in nine states and in such metropolitain regions as Austin, Cincinnati, Orlando and Seattle, as well as the U.S. Virgin Islands.
All of the leases in the trust have 10-year initial terms, which may be renewed for an additional five-years, given FCC lease renewal. Although Wirefree Partners will act as servicer, Sprint must continue to make its lease payments regardless of servicer insolvency, or failure to attempt collection on its expected payments.
Additional credit support comes in the form of a $9.85 million in administrative, network and capital expanse accounts, according to a S&P presale report.
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