Resurgent walkie-talkie pusher
is getting better terms from its bankers.
The Reston, Va., wireless service provider said Thursday it signed off on a five-year, $4 billion revolving credit pact. The deal replaces a $2.6 billion in secured term loans and revolving credit facilities, and offers Nextel lower borrowing costs and longer maturities, the company said.
The improved credit terms come after a year in which Nextel shocked its many skeptics with massive gains in subscribers, earnings and revenue. The company's shares, which traded in the low single digits in the fall of 2002, enjoyed a stellar 2003 and have been modestly lower through 2004. On Thursday they added 14 cents to $25.30.
"The closing of our new $4 billion revolver represents another important milestone on our path to investment grade," said Paul Saleh, Nextel's executive vice president and chief financial officer. "Nextel's consistently strong financial results, positive credit ratings trajectory, and favorable bank market conditions combined to produce exceptional demand for our new revolving credit facility. We are increasing our liquidity while at the same time reducing our interest rates, extending our maturities and improving our overall credit profile."
The company said the full $4 billion commitment will remain available until final maturity in 2009 and may also be used to secure letters of credit.
Under the terms of the new facility, Nextel has increased its borrowing capacity by $1.4 billion and reduced its borrowing costs by 25 basis points on the drawn portion and 60 basis points on the undrawn portion of the revolving credit facility, the company said.