8-KFinancial Events

CROWN CASTLE INC. 8-K Report, Financial Obligation (Dec 15, 2006)

Filed December 15, 2006For Securities:CCI

Summary

Crown Castle International Corp. (CCI) announced on December 15, 2006, a significant financial risk management strategy involving a forward-starting interest rate swap agreement. This agreement is designed to hedge against potential fluctuations in interest rates related to an upcoming refinancing of $1.55 billion in Tower Revenue Notes by a subsidiary. The refinancing is anticipated to occur by November 15, 2011. The swap agreement, with a notional amount of $1.55 billion, locks in a fixed interest rate of approximately 5.14% for a five-year period, starting on or before November 15, 2011, and ending on November 15, 2016. In exchange, the Company will receive floating payments based on three-month LIBOR. This move indicates the company's proactive approach to managing its debt costs and mitigating the impact of rising interest rates on its future financial obligations.

Key Highlights

  • 1Crown Castle International Corp. entered into a forward-starting interest rate swap agreement on December 15, 2006.
  • 2The swap agreement has a notional amount of $1.55 billion.
  • 3The purpose of the swap is to hedge against interest rate variability for an anticipated refinancing of $1.55 billion in Tower Revenue Notes.
  • 4The refinancing is expected to occur on or before November 15, 2011.
  • 5Under the swap, CCI will pay a fixed rate of approximately 5.14% starting on or before November 15, 2011, through November 15, 2016.
  • 6In exchange for the fixed payment, CCI will receive floating payments based on three-month LIBOR for the same five-year period.
  • 7The swap agreements will be cash settled on or before November 15, 2011.

Frequently Asked Questions

The filing discloses Crown Castle's entry into a forward-starting interest rate swap agreement designed to hedge future interest rate risk associated with a significant debt refinancing.

The swap agreement is forward-starting and will not impact Crown Castle's current cash flows or obligations. It is a hedging instrument for a debt refinancing expected in the future (by November 2011).

The swap agreement has a notional amount of $1.55 billion. The fixed rate of approximately 5.14% is for a five-year period, beginning on or before November 15, 2011, and ending on November 15, 2016.

If interest rates fall significantly, Crown Castle would still be obligated to pay the agreed-upon fixed rate of approximately 5.14% on the $1.55 billion notional amount from November 2011 onwards. They would receive floating LIBOR payments, which would be lower in a declining rate environment. This means they might pay more than the prevailing market rate for their debt during that period.