CommScope secures some critical financial runwayCommScope secures some critical financial runway

CommScope has remedied a big chunk of its debt load, announcing Tuesday that it closed refinancing transactions that address its upcoming 2025 and 2026 debt maturities.

The refinancing, which gives CommScope some important financial runway for its growth strategies, includes commitments for $3.15 billion in new first-lien term loans and $1 billion first-lien notes.

Among the specifics, CommScope's new agreements are with a group of its existing first-lien lenders, with funds managed by Apollo and Monarch Alternative Capital, including a new $3.15 billion first-lien term loan maturing in 2019, and $1 billion in first-lien notes maturing in 2031.

CommScope said proceeds from the new first-lien debt will enable the company to fully repay its senior unsecured notes due in 2025. Tied in, CommScope expects proceeds from the proposed sale of its Outdoor Wireless Networks (OWN) and Distributed Antenna Systems (DAS) business units to Amphenol Corp. for $2.1 billion will be used to fully repay CommScope's senior secured notes due in 2026. CommScope expects its transaction with Amphenol to close in Q1 2025.

The transactions help to remove a financial overhang for CommScope, which has been managing a $9.33 billion debt load. CommScope believes its projected performance, the financing transaction and the OWN and DAS sale will enable the company to drive its debt to adjusted EBITDA ratio below 6:1 by the end of 2026.

Related:CommScope gets $2.1B for its outdoor wireless networks unit and DAS biz

CommScope sold its Home Networks division, the unit that made set-tops, cable modems and streaming devices, to Vantiva late last year. In exchange, CommScope retained a 25% stake in Vantiva.

In the wake of CommScope's Amphenol deal, CommScope's core business will include Networking, Intelligent Cellular and Security Solutions (minus the OWN and DAS units), Connectivity and Cable Solutions (CCS), and Access Network Solutions (ANS), a unit that recently acquired the cable assets of Casa Systems and is angling to be a major player in cable network upgrades, including Comcast's DOCSIS 4.0 upgrade.

'Pivotal step'

"This transaction is a pivotal step forward in our ongoing process to position CommScope for long-term growth," Chuck Treadway, CommScope's president and CEO, said in a statement. "By successfully addressing our near-term maturities and greatly improving our pro forma leverage ratio, we move forward with the flexibility to focus on our core businesses and invest in the technology, products, and personnel to better deliver for our customers, and capitalize as the telecom industry recovers in the coming quarters. We will continue to explore opportunities to leverage the significant flexibility available under our credit agreements to further reinforce our capital structure as market conditions evolve."

Related:CommScope asset sale a 'lifeline,' but it's not out of the woods – analyst

"The significant size of this transaction reflects our confidence in the CommScope leadership team and path forward," execs from Apollo and Monarch said in a joint statement.