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American Tower (AMT) Boosts Flexibility With Notes Offering

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American Tower Corporation (AMT - Free Report) has priced a public offering of senior unsecured notes due 2027, 2029 and 2033, in aggregate principal amounts of €750 million ($911.4 million), €750 million ($911.4 million) and €500 million ($607.6 million), respectively. The net proceeds of the offering are anticipated to be €1,983.1 million ($2,409.8 million), after deducting underwriting discounts and estimated offering expenses.

These comprise 2027 notes, which will have an interest rate of 0.450% per annum. The notes have been priced at 99.783% of their face value. The 2029 notes, having an interest rate of 0.875% per annum, are issued at a price equal to 99.923% of their face value. Moreover, the 2033 notes with an interest rate of 1.250% per annum are being issued at 99.371% of their face value.

Markedly, American Tower plans to use the net proceeds for general corporate needs. The usage may include, among other things, the funding for acquisitions, including the pending Telxius acquisition. Also, it might comprise additions to working capital and payback or refinancing of present debt obligations.

Notably, in January 2021, American Tower entered into definitive agreements with Spain’s Telefónica, S.A. to acquire the latter’s telecom tower unit Telxius Towers, consisting of around 31,000 communications sites, spanning across Germany (roughly 12,500 existing sites), Spain (around 11,300 existing sites), Brazil, Chile, Peru and Argentina. American Tower will shell out €7.7 billion ($9.4 billion at the date of signing), conditional to customary closing adjustments.

Moreover, in a move to fund the Telxius buyout transaction, American Tower recently announced a public offering to raise $2,147.1 million and the sale of a 30% stake in ATC Europe for more than €1.6 billion.

Notably, American Tower’s efforts to fortify its operating platform as well as liquidity in these testing times and tap the debt market amid a low interest-rate environment are strategic fits.

In fact, it has a robust operating platform, with consistent adjusted EBITDA margins and revenue growth as well as a favorable return on invested capital. This indicates the strength in the company’s core underlying business and supports the company’s ability to manage its near-term obligations.

As of the first-quarter 2021 end, its net leverage ratio was at 4.8X and total liquidity was $6.3 billion. This comprised $1.9 billion in cash and cash equivalents, and availability of $4.4 billion under its revolving credit facilities (net of any outstanding letters of credit). Apart from this, with weighted average remaining term for debt of 7.1 years, it has decent financial flexibility.

Finally, as of the first-quarter end, it enjoyed investment-grade credit rating of BBB-, BBB+ and Baa3 as well as a stable outlook from Standard & Poor’s, Fitch, and Moody’s, respectively. This renders the company favorable access to debt.

However, the note offering increases the company’s long-term debt.

Shares of this Zacks Rank #3 (Hold) company have gained 9.4% over the past three months compared with the industry’s growth of 7.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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