CommScope stock surges on debt refinancing deal

Investing.com -- Shares of CommScope Holding (NASDAQ:COMM ) Company, Inc. (NASDAQ:COMM) soared 30% following the company's announcement of a comprehensive refinancing plan that addresses its upcoming debt maturities and positions it for future growth. The network connectivity solutions provider disclosed the successful closing of a significant refinancing transaction with its first-lien secured lenders after Tuesday's market close.

The Hickory, North Carolina-based company entered into new agreements, including a $3.15 billion first-lien term loan maturing in 2029, and $1 billion in first-lien notes due in 2031. This strategic move allows CommScope to fully repay its senior unsecured notes due in 2025 and its existing senior secured term loan facility. Moreover, CommScope plans to use the expected proceeds from the sale of its Outdoor Wireless Networks and Distributed Antenna Systems business units to Amphenol Corporation (NYSE:APH ) for $2.1 billion, anticipated to close in the first quarter of 2025, to repay its senior secured notes due in 2026 and partially redeem its senior secured notes due in 2029.

President and CEO Chuck Treadway highlighted the transaction as a pivotal step for CommScope, improving its pro forma leverage ratio and providing the flexibility needed to focus on core business areas and technological investments. According to Treadway, the company is poised to take advantage of the telecom industry's recovery in upcoming quarters.

The refinancing deal has been met with support from key lenders, including funds managed by Apollo and Monarch Alternative Capital. The significant size of the transaction underscores the lenders' confidence in CommScope's leadership and future trajectory.

Upon the completion of the asset sale and the anticipated improvement in business performance, CommScope expects to meet the conditions for the first term loan rate step down. The company projects that these actions, along with its business performance, will reduce its total debt to Adjusted EBITDA ratio below 6.00:1.00 by the end of 2026, demonstrating a solid step towards financial stability and growth.

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Source: Investing.com