8-KMaterial AgreementsFinancial EventsRegulation FD+1

AMERICAN TOWER CORP /MA/ 8-K Report, Material Agreement (Apr 12, 2011)

Filed April 12, 2011For Securities:AMT

Summary

American Tower Corporation (AMT) announced on April 12, 2011, that it has entered into a new unsecured revolving credit facility, initially providing access to $860 million, with the potential to expand up to $1.0 billion upon receiving additional commitments. This facility, with a five-year term maturing in April 2016, offers flexible borrowing terms and can be used for various corporate purposes including working capital, acquisitions, and debt refinancing. Key to investors, the credit agreement includes financial covenants such as a maximum consolidated total leverage ratio of 6.00:1.00, a maximum consolidated senior secured leverage ratio of 3.00:1.00, and a minimum interest coverage ratio of 2.50:1.00. While these covenants introduce restrictions, they are standard for such credit facilities and aim to ensure the company's financial health. The report also disclosed information regarding a potential special earnings and profits distribution, estimated to be no more than $400 million, in connection with the company's consideration of electing Real Estate Investment Trust (REIT) status for the 2012 tax year.

Key Highlights

  • 1Entered into a new unsecured revolving credit facility with an initial capacity of $860 million, expandable to $1.0 billion.
  • 2The credit facility has a five-year term, maturing on April 8, 2016.
  • 3Interest rates on borrowings are variable, based on LIBOR or a defined base rate, plus a margin that depends on the company's debt ratings.
  • 4Contains financial maintenance covenants including consolidated total leverage, consolidated senior secured leverage, and interest coverage ratios.
  • 5Borrowings can be used for working capital, acquisitions, general corporate purposes, and refinancing debt.
  • 6Potential for a special earnings and profits distribution of up to $400 million if the company elects REIT status for the 2012 tax year.

Frequently Asked Questions

The new unsecured revolving credit facility is intended to provide American Tower Corporation with financial flexibility for working capital needs, to finance acquisitions, for other general corporate purposes, and to refinance or repurchase other indebtedness. It can also be used, under certain conditions, to repurchase the company's equity securities.

The credit agreement includes three main financial maintenance tests: a consolidated total leverage ratio (Total Debt to Adjusted EBITDA) not greater than 6.00:1.00, a consolidated senior secured leverage ratio (Senior Secured Debt to Adjusted EBITDA) not greater than 3.00:1.00, and an interest coverage ratio (Adjusted EBITDA to Interest Expense) of not less than 2.50:1.00.

If American Tower Corporation elects REIT status for the taxable year beginning January 1, 2012, it may be required to make a special earnings and profits (E&P) distribution. The potential aggregate amount of this distribution is estimated to be no more than $400 million, and is anticipated to be materially less than that amount, subject to board approval and the timing of taxable transactions.

The interest rate is determined by a margin above either LIBOR or a defined base rate, ranging from 1.350% to 2.600% above LIBOR, or 0.350% to 1.600% above the base rate, depending on debt ratings. There is also a quarterly commitment fee on the undrawn portion, ranging from 0.250% to 0.550% per annum, also based on debt ratings. The current margin over LIBOR is 1.850%, and the current commitment fee is 0.350%.