Summary
AT&T Inc. (T) announced on December 23, 2019, that it has monetized a portion of its previously announced sale of wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands. Through its indirect subsidiary, Pagoda Holdings, LLC (the "Issuer"), AT&T completed a transaction with Mizuho Bank, Ltd. for $1.95 billion via the sale of preferred equity interests in the Issuer. This transaction provides AT&T with immediate capital, which is expected to be used for general corporate purposes, including share repurchases and debt reduction.
Key Highlights
- 1AT&T completed a $1.95 billion monetization transaction through its subsidiary Pagoda Holdings, LLC.
- 2The transaction involved the sale of preferred equity interests in the Issuer to Mizuho Bank, Ltd.
- 3Proceeds are derived from the ongoing sale of certain wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands.
- 4The Issuer received secured promissory notes from AT&T's subsidiary members, backed by rights to payment from the sale of the Caribbean assets.
- 5The preferred equity interests entitle Mizuho to cumulative quarterly distributions at a 4.75% per annum rate, subject to reset after five years.
- 6AT&T has the option to redeem the preferred equity interests under specific conditions, including after December 19, 2024.
- 7The $1.95 billion in proceeds will be used for general corporate purposes, including share repurchases and debt reduction.
Frequently Asked Questions
This 8-K filing announces AT&T's completion of a $1.95 billion monetization transaction involving the sale of preferred equity interests in its subsidiary, Pagoda Holdings, LLC, to Mizuho Bank, Ltd. This transaction is related to the ongoing sale of its Puerto Rico and U.S. Virgin Islands wireless and wireline operations.
AT&T's subsidiary, Pagoda Holdings, LLC, issued preferred equity interests to Mizuho Bank, Ltd. for $1.95 billion. This essentially provides AT&T with upfront capital by selling a stake in the future proceeds from the sale of its Caribbean assets, rather than waiting for the full sale to close.
AT&T intends to use the proceeds from this transaction for general corporate purposes, which include potentially repurchasing its own shares and paying down outstanding debt.
Mizuho Bank will receive cumulative quarterly distributions at an initial annual rate of 4.75%. This rate is subject to reset after five years. The Issuer (Pagoda Holdings, LLC) has the option to redeem these preferred equity interests, for example, after December 19, 2024, or upon the closing or termination of the stock purchase agreement for the Caribbean assets.