RE:RE:RE:A well written perspectiveInteresting points, I am very curious to see if they follow Rci Lead in moving assets of the balance sheet, doesn't seem it was well recieved but it will take some leverage off the table.
"Sizing up the full NAV impact of $7B structured equity financing will require additional disclosure, but clearly a meaningful de-levering event. Rogers announced that it has entered into an agreement with a financial investor for $7B in structured equity financing in return for a minority interest (>20%) in a subsidiary that will manage regional wireless backhaul transport infrastructure. The subsidiary will service Rogers exclusively and generate revenues based on wireless data throughput at wholesale rates ultimately generating subsidiary net income that in turn will fund minority interest distributions. While sizing up the full NAV impact of this financing will require additional disclosure (including distributions and distribution escalations, exit options and terms and other potential instrument features etc.), management has indicated: (i) initial annual distributions are higher than the after-tax interest savings for Rogers of $250MM, but not materially higher; (ii) subsidiary revenues (and in turn minority interest distributions) will be subject to volume tiers that adjust wholesale rates as wireless data traffic increases effectively providing a defacto ceiling for distributions; and (iii) Rogers will maintain full control of the infrastructure including control over the duration of the structure (i.e., implying some form of termination option). Although the net cash outflow will be an incremental drag on FCF, clearly this financing is a meaningful de-levering event for Rogers and likely highlights the significant unrealized value of Rogers’ telecom infrastructure. Management expects net debt/EBITDA by the end of 2024 to be 3.7x (versus our estimate prior to this financing of 4.6x) with the structured equity financing not diluting Rogers shares while diversifying the company’s source of financing."