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American Tower enters new 1-year $1.5B unsecured term loan, $500M securitization

Cell tower real estate investment trust American Tower Corp. entered into a new $1.5 billion unsecured term loan, and a subsidiary issued $500.0 million of secured tower revenue securities.

Proceeds from both the term loan and the securities issuance were used to pay down debt under the company's revolving credit facilities.

The term loan matures March 29, 2019, at which time all outstanding principal and accrued but unpaid interest are due in full. The loan may be prepaid without penalty or premium. American Tower may choose either a defined base rate or the London Interbank Offered Rate as the base rate for borrowings under the loan. The current interest rate is LIBOR plus 0.875%.

Under the terms of the loan, American Tower must maintain a total debt to adjusted EBITDA ratio of not greater than 6x as of the end of each fiscal quarter, or not greater than 7x in certain periods after qualified acquisitions. In addition, its senior secured debt to adjusted EBITDA ratio may not go above 3x for the company and its subsidiaries.

The securitization deal was conducted by American Tower Trust I, a trust established by an indirectly owned special-purpose subsidiary of the company. In a private transaction, it issued $500.0 million of secured tower revenue securities, series 2018-1, subclass A. The interest rate on those securities is 3.652%, and they have been rated Aaa(sf) and AAA(sf) by Moody's and Fitch, respectively.

The securities issued by the trust correspond to components of a loan made to certain borrower entities, and the loan is primarily secured by mortgages on the borrower entities' interest in certain wireless communications and related tower sites. Debt service on the loan will be paid only from cash flows generated from operating the sites, and the borrowers must make monthly payments on the loan.

To meet its risk retention requirement, the trust issued $26.4 million of subclass R securities, which an affiliate of American Tower purchased.

Mizuho Bank Ltd. served as administrative agent, joint lead arranger and joint book runner on the term loan. RBC Capital Markets and TD Securities (USA) LLC were co-syndication agents, joint lead arrangers and joint book runners.