Sprint Makes Two Transactions to Increase Liquidity by $3B

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Sprint, who is starting to feel the cash crunch as of late, is looking for ways to stay afloat after failing to persuade the FCC to let them merge with T-Mobile, and then replacing CEO's. Since SoftBank bought Sprint, Masayoshi Son has lost $3.2 billion from his net worth, and that's not something he wants to continue. Which means Sprint needs to start making money and getting out of the red pretty soon. Due to that, Sprint has been finding creative ways to spread out their money. With a  big portion of their debt being due at the end of the year, they've had to secure loans using their network infrastructure as colateral. And these two new transactions are other ways in which Sprint hopes to stop the bleeding, at least a little bit.

In their press release today, Sprint announced that they have signed a second deal with Mobile Leasing Solutions, LLC (MLS) for sale and lease-back of certain leased devices. What this means is that the leasing is going to be done through this third-party company, and taking the financial risk out of Sprint's hands. The transaction was arranged by Mizuho Securities, Co., LTD, and is expected to provide Sprint with about $1.1 billion in cash proceeds. The second transaction is a 18-month bridge financing facility, which will provide $2 billion of additional liquidity. Also arranged by Mizuho Bank, LTD. Adding this onto the $2.2 billion of network-related financing that the company already announced, these transactions have improved the liquidity position for Sprint by more than $5 billion in April.

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This doesn't mean that Sprint is out of the dog house, so to speak. But it's a way to put off some of their cash and bills while they attempt to turn the company around. They are needing to get creative when it comes to their bills, with them lowering prices left and right and not being able to keep customers – let alone the lucrative customers leaving competitors to come to Sprint – the company hasn't made a whole lot of cash recently. Which is leaving them in a tough spot right about now. Sprint is due to announce their Q1 earnings on May 3rd. And you can bet that Sprint's CEO, Marcelo Claure will be asked about these transactions during their earnings call.