Yes they retired new debt post creation of new debt that carries a 12% interest rate, in other words the same debt now costs more - kinda like having paid off your installment loan with your credit card at cash advance rates.
1. Retirement of debt early is a positive sign, whether one month, 6 months or 1 year
2. It means they are capturing new customers and reducing churn (TMobile and IPhone are the catalysts)
3. The name of the game is CASH FLOW. I retire debt with the proceeds of the new offering to reduce my overall interest costs PAID PER MONTH.... Remember inverse relationship of interest rate with price of bonds (retire cheaper 8% vs new 11% bonds is offset by price decline of bonds I buy with the new proceeds, plus I extend my maturities, which means I pay less per month on a CASH FLOW BASIS...Maybe some increased interest cost over the life of the new bonds but I doubt they will be held to maturity...definitely callable by S.
3. Since the new stuff is to Qualified Investors, S still has access to capital markets for more, if necessary. Plus, bonds are probably callable anytime, as stated above.
4. Gainsmanship with CLWR ends today or tommorrow the latest (interest payment due date by CLWR). CLWR is not stupid enough to declare BK. They called a full house and must show S the cards today
5. Look at the numbers! S has a $7 bio market cap and $4.5 bio in CASH! Any acquirer can by it for 1/2 the price and that does not include CLWR and the value of the SPECTRUM, which is the name of the game in Telecom. Probably another $8-10 per share just in Spectrum.
6. YES, S is an acquisition candidate. If I had my guess, I would say Vodafone (why have of Verizon Wireless plus dividends when you can sell it to V and buy the whole enchilada (S) with the dividends you receive plus profit on the sale. Non issue if a British company buys a US Telecom due to closeness of both countries in politics, culture and defence. You would also have 100% of a telecom with 55 mio customers! Another candidate is Google. A wild card is America Movil. Carlos Slim, the richest man in the world owns the largest telecom south of the Rio Grande. He probably has been reticent to complete the western hemisphere telecom giant due to the fact that he is Mexican and the US Regulators would have a field day. YES, believe it, we Gringos are still very racist and would frown on such a takeover for that very reason...The Chinese, IMO, will never get S because of the racist element also plus the fear of Cybersecurity breaches (how can Nat'l Sec. Agency work secretly with Chinese to tap our phones?...no joke intended)
7. No brainer to buy today at $2.50 with a $10 upside. It's like buying a call option on S without an Expiry.
I continue to be LONG AND STRONG!
I personally don't know how to take this message. To Me it sounds like Sprint is the typical American family they just got a new credit card(4 billion) and paid off their old credit card (2.something billion),, but we don't have to worry about them going bankrupt till 2013 right! So let's ride the train!