Sprint got financial relief Friday in the form of a commitment for a $1.2 billion loan from a new device reseller formed by Sprint's parent, SoftBank, and other investors.
Mobile Leasing Solutions, LLC, is the new entity, backed by SoftBank Corp. and other equity investors who have secured financing from leading banks, on better terms than going to the debt market, Sprint says. Sprint is selling the operation $1.3 billion of leased device assets, in return for a total of $1.2 billion in financing when the deal closes, which is expected in December.
The agreement will get the leasing costs off Sprint's books and help improve its overall liquidity, Sprint said in a statement. The deal will not be a one-off; the company can repeat such agreements quarterly, new Sprint CFO Tarek Robbiati said in an investor call on Friday.
The deal keeps it all in the Sprint extended family. Sprint CEO Marcello Claure's former company Brightstar Corp. , which is part owned by SoftBank, helped to set up the operation and will provide tracking for the used, off-lease devices that the program generates.
The deal should help ease the financial pressure on Sprint somewhat. The company has said that it needs to reduce its overall expenses by $2 billion by the end of fiscal 2016, which is expected to result in thousands of job cuts. (See Sprint to Take $2B Shave, Sprint Undercuts Rivals With Half-Price Offers, Should CEO Pay Be Part of Sprint's $2B Shave? and Sprint, Verizon Face Reorganization, Job Cuts.)
— Dan Jones, Mobile Editor, Light Reading