SBA Communications: convertibles issue to fund maturities through 2013

By Jennifer Lanning Drey

Portland, Ore., May 5 - SBA Communications Corp.'s recent $500 million convertible note issuance has provided the company all of the cash necessary to cover debt maturities through 2013, including its 0.375% convertible notes and the Optasite and SBA credit facilities, Jeffrey A. Stoops, chief executive officer of SBA Communications, said Tuesday during the company's first-quarter earnings conference call.

The company said it intends to use a substantial portion of the proceeds of the offering to repay or repurchase debt.

Next, SBA will focus its attention on refinancing its 2005 CMBS, which do not mature but will increase its interest rate and begin restricting certain cash flows if not refinanced by November 2010, Stoops said.

The company is considering pursuing a secured financing in the fourth quarter of 2009 or first quarter of 2010 in order to first allow the secured debt market, as well as the company's cash flows, to improve, he said.

SBA believes a $600 million to $800 million transaction would be achievable based on expected cash flows.

Based on its confidence that it will be able to complete a transaction, SBA is now comfortable resuming some cash acquisitions this year. The company will likely enter 2010 targeting 5% to 10% or more annual portfolio growth, the company said.

Debt repurchases

During the first quarter, SBA repurchased in open-market and privately negotiated transactions, $52.3 million of its 0.375% convertible senior notes and $7.6 million of its 2005 and 2006 CMBS notes for $42.0 million in cash and about 618,000 shares of common stock, Pam Kline, SBA's vice president of capital markets, said during the call.

Total debt was $2.5 billion at the March 31 close of the first quarter, and the company had $126.5 million of cash and cash equivalents, short-term investments and short-term restricted cash.

Subsequent to March 31, the company repurchased $3.9 million of its 0.375% convertible senior notes and $9.8 million of its 2005 CMBS notes for $13.2 million in cash.

Strong quarter

SBA's first-quarter revenues were $135.1 million, up from $109.9 million in the comparable 2008 period due in part to strong site-leasing revenues.

Tower cash flow for the quarter was $89.3 million, up almost 32% from the same period in 2008.

Adjusted EBITDA in the first quarter was $81.7 million, compared with $61.5 million in the year-earlier period.

SBA Communications is a Boca Raton, Fla.-based owner of wireless communications towers.

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