What is the purpose of these two financing events?

The company is executing a debt refinancing strategy. They are issuing new, lower-cost debt (4.625% notes due 2015) and using the proceeds, in part, to redeem older, higher-cost debt (7.125% notes due 2012). This aims to reduce overall interest expense.

What is the effective cost of the new debt?

The new senior unsecured notes due 2015 have a stated interest rate of 4.625% per annum. They were issued at 99.864% of their face value, meaning there was a small original issue discount, which slightly increases the effective yield but remains significantly lower than the debt being redeemed.

When will the older notes be paid off?

The 7.125% senior notes due 2012 are scheduled to be redeemed on November 13, 2009. Investors holding these notes will receive the principal amount plus a premium of 1.781% and any accrued interest up to the redemption date.

How does this debt management impact American Tower's financial position?

By replacing higher-interest debt with lower-interest debt, American Tower is expected to reduce its future interest expense, thereby improving its net income and potentially increasing its free cash flow. This is generally viewed positively by investors as it enhances profitability and financial flexibility.

AMT 8-K SEC Disclosure — Oct 14, 2009

Summary

American Tower Corporation (AMT) filed an 8-K on October 14, 2009, detailing two significant financing activities. The company successfully priced an institutional private placement of senior unsecured notes due 2015. These new notes carry a 4.625% interest rate and were issued at a slight discount to face value. This move suggests the company is actively managing its debt structure and seeking to lower its overall borrowing costs. In conjunction with this new issuance, AMT announced the redemption of its outstanding 7.125% senior notes due 2012. These older notes will be redeemed at a premium (101.781% of principal) on November 13, 2009. The redemption, financed partly by the new notes, indicates a strategic refinancing effort to replace higher-cost debt with lower-cost debt, potentially improving future interest expense and cash flow.

Key Highlights

1Priced institutional private placement of senior unsecured notes due 2015.
2New notes have a coupon rate of 4.625% per annum.
3New notes were issued at 99.864% of face value.
4Called for redemption of 7.125% senior notes due 2012.
52012 notes redemption price is 101.781% of principal.
6Redemption date for the 2012 notes is November 13, 2009.
7The transactions indicate a debt refinancing strategy to lower interest costs.

AMERICAN TOWER CORP /MA/ 8-K Report, Corporate Update (Oct 14, 2009)

Summary

Key Highlights

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