8-KMaterial AgreementsFinancial Events

AMERICAN TOWER CORP /MA/ 8-K Report, Material Agreement (Feb 14, 2019)

Filed February 14, 2019For Securities:AMT

Summary

American Tower Corporation (AMT) announced on February 14, 2019, the closing of a new $1.3 billion unsecured term loan facility. The net proceeds from this new loan were used to repay existing indebtedness under a prior $1.5 billion term loan agreement from March 2018. This move effectively refinances a portion of the company's debt, potentially offering more favorable terms or extending maturity. The new $1.3 billion term loan matures on February 13, 2020, and does not require principal amortization, allowing for flexibility. Interest rates are variable, based on either a defined base rate or LIBOR, plus a margin that depends on AMT's debt ratings, currently set at LIBOR plus 0.800%. The agreement includes standard financial covenants related to leverage ratios (total leverage not exceeding 6.00:1.00 and senior secured leverage not exceeding 3.00:1.00) and an interest coverage ratio if ratings fall below investment grade.

Key Highlights

  • 1Secured a new $1.3 billion unsecured term loan facility.
  • 2Used proceeds to repay the existing $1.5 billion term loan from March 2018.
  • 3The new term loan matures on February 13, 2020.
  • 4No principal amortization is required; full repayment is due at maturity.
  • 5Interest rate is based on LIBOR or a defined base rate, with current rate at LIBOR plus 0.800%, subject to debt ratings.
  • 6Key financial covenants include a total leverage ratio not to exceed 6.00:1.00 and a senior secured leverage ratio not to exceed 3.00:1.00.
  • 7Includes a provision for an interest coverage ratio of at least 2.50:1.00 if debt ratings fall below investment grade.

Frequently Asked Questions

The primary purpose of the new $1.3 billion term loan was to repay and refinance existing indebtedness under the company's $1.5 billion term loan agreement entered into on March 29, 2018. This action allows American Tower to manage its debt structure.

The new $1.3 billion term loan matures on February 13, 2020. It does not require any principal amortization, meaning the entire outstanding principal and accrued interest are due in full at maturity. The company has the option to prepay the loan at any time without penalty.

The new term loan requires American Tower to maintain a total leverage ratio (Total Debt to Adjusted EBITDA) not greater than 6.00 to 1.00, and a senior secured leverage ratio (Senior Secured Debt to Adjusted EBITDA) not greater than 3.00 to 1.00. Additionally, if the company's debt ratings fall below investment grade, it must maintain an interest coverage ratio (Adjusted EBITDA to Interest Expense) of at least 2.50 to 1.00.

This transaction represents a refinancing of a portion of American Tower's debt. By repaying the older term loan with proceeds from the new one, the company is managing its leverage and potentially optimizing its borrowing costs and maturity profile. The unsecured nature of the new loan could also imply favorable terms or strong credit standing.