CommScope Shares Surge on Debt Refinancing Agreement
Investing.com -- Shares of CommScope Holding Company, Inc. (NASDAQ:COMM) surged 30% following the company’s announcement of a comprehensive refinancing plan addressing upcoming debt maturities and positioning for future growth. The network connectivity solutions provider disclosed after market close on Tuesday that it successfully completed a significant refinancing transaction with first-lien lenders.
The Hickory, North Carolina-based company signed new agreements, including a $3.15 billion first-lien term loan maturing in 2029 and a $1 billion first-lien bond maturing in 2031. This strategic move allows CommScope to fully repay its senior unsecured bonds maturing in 2025 and its existing senior secured term loan facility. Additionally, CommScope plans to utilize expected proceeds from the $2.1 billion sale of its Outdoor Wireless Networks and Distributed Antenna Systems business units to Amphenol Corporation, which is anticipated to close in the first quarter of 2025, to repay its senior secured bonds maturing in 2026 and to partially redeem its senior secured bonds maturing in 2029.
President and CEO Chuck Treadway emphasized this transaction as a significant step for CommScope, noting it improves the pro forma leverage ratio and provides the necessary flexibility to focus on core business areas and technological investments. According to Treadway, the company is poised to capitalize on a recovery in the telecommunications sector in the coming quarters.
The refinancing agreement received support from key lenders, including funds managed by Apollo and Monarch Alternative Capital. The significant scale of the transaction underscores lenders' confidence in CommScope's leadership and future trajectory.
Following the completion of the asset sale and anticipated improvements in business performance, CommScope expects to meet the necessary conditions for an initial term loan interest rate reduction. The company projects these actions and business performance will reduce the total debt/Adjusted EBITDA ratio below 6.00:1.00 by the end of 2026, signifying a solid step towards financial stability and growth.