8-KOther Events

AMERICAN TOWER CORP /MA/ 8-K Report (May 25, 2004)

Filed May 25, 2004For Securities:AMT

Summary

American Tower Corporation (AMT) announced the successful refinancing of its credit facility, replacing its previous credit agreement with a new $1.1 billion senior secured credit facility. This new facility consists of a $400 million revolving credit facility, a $300 million Term Loan A, and a $400 million Term Loan B, all guaranteed by the Company and its subsidiaries and secured by substantially all of its assets. The refinancing resulted in net proceeds of approximately $685 million, of which about $670 million was used to repay outstanding debt under the old facility. The remaining proceeds are earmarked for general corporate purposes, including refinancing other existing indebtedness. A significant benefit of the new facility is the extension of maturity dates for most borrowings from 2007 to 2011, providing greater financial flexibility.

Key Highlights

  • 1Refinanced existing credit facility with a new $1.1 billion senior secured credit facility.
  • 2New facility includes a $400 million revolving credit facility, $300 million Term Loan A, and $400 million Term Loan B.
  • 3Approximately $685 million in net proceeds received from borrowings, with $670 million used to repay prior debt.
  • 4Maturity dates extended for the majority of borrowings from 2007 to 2011.
  • 5New facility allows for using borrowings and internal funds to repurchase other indebtedness without lender approval.
  • 6The facility contains specific financial covenants and operating restrictions, including leverage, senior leverage, interest coverage, and fixed charge ratios.
  • 7Potential write-off of up to approximately $12 million in deferred financing fees associated with the refinanced credit facilities.

Frequently Asked Questions

This 8-K filing announces American Tower Corporation's successful refinancing of its credit facility into a new, larger $1.1 billion senior secured credit facility. It details the structure of the new facility, the use of proceeds, and key terms related to maturity extensions and financial covenants.

The refinancing extends the maturity dates of a significant portion of the company's debt from 2007 to 2011, providing greater financial flexibility and stability. It also allows the company more freedom to manage its debt by repurchasing other indebtedness without requiring explicit lender consent.

Investors should note the financial maintenance tests, including a maximum Total Debt to Annualized Operating Cash Flow ratio (starting at 5.50:1.00 and decreasing over time to 4.00:1.00), a maximum Senior Debt to Annualized Operating Cash Flow ratio (starting at 4.00:1.00 and decreasing to 3.00:1.00), a minimum Interest Coverage Ratio of 2.50:1.00, and a Fixed Charge Coverage Ratio of at least 1.00:1.00. Failure to meet these covenants could lead to default.

The company may incur a write-off of deferred financing fees of up to approximately $12 million related to the previous credit facilities that were refinanced. This would be a non-cash expense impacting the income statement.