T-Mobile announced the closure of its merger with Sprint on Wednesday, April 1, but the same day, the California Public Utilities Commission (CPUC) stated the companies could not begin merging their California operations until after the CPUC issues a final decision.
While the CPUC issued a proposal on March 11 recommending approval with conditions, the CPUC hasn’t yet voted on the proposal; that’s still scheduled for April 16, reported Fierce Wireless.
CPUC Commissioner Clifford Rechtschaffen, a former senior adviser to ex-California Governor Jerry Brown, issued the letter to the companies in response to a March 31 letter from T-Mobile’s then-President and COO Michael Sievert. Sievert, now the CEO, had informed the CPUC on March 31 that they intended to close the merger on April 1.
Bloomberg reported earlier this week that a group of banks were formally notified on Monday that they needed to make more than US$20 billion available on April 1 so that the companies could close the deal after the COVID-19 outbreak disrupted plans to sell the debt to third-party investors.
Sievert’s letter to the CPUC made it clear that the companies couldn’t wait any longer to consummate the merger.
“The COVID-19 crisis has created unprecedented uncertainty and risk in the financial markets, including the debt markets that are critical for us to secure the required financing for the merger and our 5G network build-out,” Sievert wrote. “The market for investment grade long-term debt financing, upon which our longstanding plans relied, has witnessed unprecedented upheaval in recent weeks. As a result, we are forced to rely on short-term bridge financing that was secured from a group of lenders under an existing conditional commitment.”
He added, “Right now, as I write this, we are fortunate that the banks are still prepared to provide bridge financing for an April 1 close. With the continuing turmoil in the financial markets, however, there are no assurances that the banks will continue to be able to fund the transaction if the closing is delayed any further. In short, if we do not close the transaction on April 1, it is conceivable that we may never be able to do so.”
Full Content: Fierce Wireless
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