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Sprint inks deal for sale and lease-back of certain network equipment

entered into a transactionwith several bankruptcy remote entities, known as Network LeaseCo, for the saleand leaseback of certain existing network assets.

The transactionis expected to close in the week of April 11 and provide the company with $2.2 billionof funding, according to an April 6 news release.

The dealwill give Network LeaseCo specific network assets, which will be used as collateralto raise $2.2 billion in borrowings from external investors. For Sprint, the companyexpects to receive $2.2 billion of cash proceeds, which will be repaid in staggeredand unequal payments through January 2018.

For accountingpurposes, Sprint will consolidate Network LeaseCo and Sprint's consolidated financialswill reflect the cash proceeds it receives and the underlying debt of Network LeaseCo.The network assets involved in the transaction, which have a net book value of about$3 billion and consist primarily of equipment located at cell towers, will remainon Sprint's consolidated financial statements and will continue to be depreciated.In addition, Sprint will record interest expense incurred in connection with thedebt of Network LeaseCo.

As ofDec. 31, 2015, Sprint had total liquidity of $6 billion with an additional $600million of availability under vendor financing agreements that can be used towardthe purchase of 2.5 GHz network equipment.