American Tower’s (AMT) innovatively structured bond issue enabled the company to eliminate a junior convertible security carrying a near-term put at a time when all the company’s securities were trading at or near distressed levels.
Amid a wireless and tower sector that had seen revenue plummet and access to capital severely restricted, AMT – and the transaction – faced a difficult environment.
The deal hinged on $808m of senior subordinated discount notes, issued out of the operating company, with warrants to purchase Class A shares of AMT. The issue enabled the pre-payment of $200m near-term of bank amortisation, providing AMT with a substantial debt covenant cushion and improved liquidity. The operating company structure also allowed for a public offering that reduced dilution to AMT relative to a private equity alternative.
The deal was executed in two days despite a two-notch downgrade from Standard & Poor’s during the marketing period and a triple C rating assigned to the notes.
