AT&T Obtains $14B+ Loan

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AT&T has entered into a $14.7 billion term loan credit agreement with Bank of America (BofA). According to a filing with the U.S. Securities and Exchange Commission, the funds will be available for AT&T to withdraw at any point before May 29, 2021. AT&T states it will be able to use the funds to buy additional spectrum “among other things,” reports Capacity.

The news follows reports that AT&T was in early stage negotiations with banks to raise approximately $14 billion to acquire more spectrum in light of the FCC’s 5G C-band auction. Bloomberg reported that AT&T sought a loan from its banking group, rather than T-Mobile’s approach of contacting investors. The “delayed-draw” structure enables AT&T to wait to tap the money until it needs the cash; the one-year structure implies the loan would be repaid in the bond market, according to Bloomberg.

AT&T has not confirmed it’s using the money specifically for this purpose.  

The auction of 3.7 GHz to 4.2 GHz spectrum surpassed the estimated $47 billion goal and topped $80.9 billion in its first phase. Bidding in the assignment phase of Auction 107 is set to begin on February 8.

Analysts at financial company Raymond James previously predicted that AT&T would emerge as the second highest bidder in the C-band auction; it estimated the telecom’s outlay at $20 billion. That compares to a predicted $30 billion by Verizon and $11 billion from T-Mobile, according to Mobile World Live.

AT&T ended 2020 with $9.7 billion in cash assets, $153.8 billion in long-term debt and another $3.5 billion in debt that’s due to mature within one year.

Funds from the BofA loan must be repaid within one year of their withdrawal. AT&T raised $3 billion from a bond offering last month. At time, the telecom said the money would be used to purchase additional spectrum and refinance existing debt, according to Mobile World Live.

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