Uniti Group Inc. Announces Pricing of $589 Million Fiber Securitization Notes Offering

Rhea-AI Summary

Uniti Group (Nasdaq: UNIT) announced the pricing of $589 million in secured fiber network revenue term notes through its subsidiaries. The offering consists of:

- $426 million at 5.9% (Class A-2)
- $65 million at 6.4% (Class B)
- $98 million at 9.0% (Class C)

The notes, with a weighted average yield of 6.5%, will mature in April 2030 and will be secured by fiber network assets and customer contracts in Florida, Louisiana, Mississippi, and Alabama. The offering is expected to close on February 3, 2025. Proceeds will be used to repay the existing ABS bridge facility and for general corporate purposes, including success-based capital investments and debt repayment.

Positive

• Secured $589 million in new financing
• Weighted average yield of 6.5% is competitive in current market conditions
• Assets backing the notes provide strong collateral

Negative

• High 9.0% interest rate on Class C notes indicates higher borrowing costs for a portion of the debt

Insights

Financial Analyst

This $589 million fiber securitization notes offering represents a strategic financial maneuver for Uniti Group. The deal's structure, featuring three tranches with varying yields (5.9%, 6.4% and 9.0%), demonstrates sophisticated financial engineering. The weighted average yield of 6.5% appears competitive in the current market environment.

The securitization is backed by valuable fiber network assets and customer contracts in Florida and the Gulf Coast region, effectively monetizing these infrastructure assets while retaining operational control. This transaction provides Uniti with immediate capital while spreading the repayment obligation until 2030, improving near-term liquidity and financial flexibility.

The designation of the issuers as "unrestricted subsidiaries" is particularly noteworthy - this structure effectively ring-fences these assets from Uniti's existing debt obligations, potentially reducing overall corporate risk. The planned use of proceeds to repay the existing ABS bridge facility suggests prudent liability management, while the flexibility to fund success-based investments could support future growth initiatives.

Infrastructure Investment Specialist

The securitization of fiber network assets represents an innovative approach to infrastructure monetization. By leveraging physical fiber assets and associated customer contracts in high-growth southeastern markets, Uniti is extracting value from its infrastructure portfolio while maintaining operational control. The geographic focus on Florida and the Gulf Coast region is strategic, as these areas continue to see robust demand for fiber connectivity.

The multi-tranche structure with Class A-2, B and C notes indicates careful consideration of investor risk appetites. The $426 million Class A-2 tranche, with its lower 5.9% yield, suggests strong underlying asset quality, while the $98 million Class C tranche's 9.0% yield provides an attractive option for investors seeking higher returns with corresponding risk.

This transaction demonstrates the growing maturity of fiber infrastructure as an asset class, potentially paving the way for similar deals in the telecommunications infrastructure sector.

LITTLE ROCK, Ark., Jan. 17, 2025 (GLOBE NEWSWIRE) -- Uniti Group Inc. (the “Company,” “Uniti,” or “we”) (Nasdaq: UNIT) today announced that Uniti Fiber ABS Issuer LLC and Uniti Fiber TRS Issuer LLC, limited-purpose, bankruptcy remote subsidiaries of Uniti (collectively, the “Issuers”), have priced their offering of $589,000,000 aggregate principal amount of secured fiber network revenue term notes, consisting of $426,000,000 5.9% Series 2025-1, Class A-2 term notes, $65,000,000 6.4% Series 2025-1, Class B term notes and $98,000,000 9.0% Series 2025-1, Class C term notes, each with an anticipated repayment date in April 2030 (collectively, the “Notes”). Collectively, the Notes have a weighted average yield of approximately 6.5%. The Notes will be secured by certain fiber network assets and related customer contracts in the State of Florida and the Gulf Coast region of Louisiana, Mississippi and Alabama. Each of the Issuers and its direct parent entities and subsidiaries have been designated as “unrestricted subsidiaries” under Uniti’s credit agreement and the indentures governing its outstanding senior notes. The offering is expected to close on February 3, 2025.

Uniti intends to use the net proceeds of the offering to, among other things, repay and terminate its existing ABS bridge facility and for general corporate purposes, which may include success-based capital investments and/or repayment of outstanding debt.

The Notes will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act or any applicable state securities laws. The Notes were offered only to persons reasonably believed to be qualified institutional buyers under Rule 144A under the Securities Act and outside the United States in compliance with Regulation S under the Securities Act.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

ABOUT UNITI GROUP INC.

Uniti, an internally managed real estate investment trust, is engaged in the acquisition and construction of mission critical communications infrastructure, and is a leading provider of fiber and other wireless solutions for the communications industry.  As of September 30, 2024, Uniti owns approximately 144,000 fiber route miles, 8.7 million fiber strand miles, and other communications real estate throughout the United States. Additional information about Uniti can be found on its website at www.uniti.com.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended from time to time. Those forward-looking statements include all statements that are not historical statements of fact, including those regarding the proposed offering of the Notes.

Words such as "anticipate(s)," "expect(s)," "intend(s)," “plan(s),” “believe(s)," "may," "will," "would," "could," "should," "seek(s)" and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to the Company’s and Windstream’s ability to consummate our merger with Windstream on the expected terms or according to the anticipated timeline, the risk that our merger agreement with Windstream (the “Merger Agreement”) may be modified or terminated, that the conditions to our merger with Windstream may not be satisfied or the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, the effect of the announcement of our merger with Windstream on relationships with our customers, suppliers, vendors, employees and other stakeholders, our ability to attract employees and our operating results and the operating results of Windstream, the risk that the restrictive covenants in the Merger Agreement applicable to us and our business may limit our ability to take certain actions that would otherwise be necessary or advisable, the diversion of management’s time on issues related to our merger with Windstream, the risk that we fail to fully realize the potential benefits, tax benefits, expected synergies, efficiencies and cost savings from our merger with Windstream within the expected time period (if all all), legal proceedings that may be instituted against Uniti or Windstream following announcement of the merger, if the merger is completed, the risk associated with Windstream’s business, adverse impacts of inflation and higher interest rates on our employees, our business, the business of our customers and other business partners and the global financial markets, the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements, the ability and willingness of our customers to renew their leases with us upon their expiration, our ability to reach agreement on the price of such renewal or ability to obtain a satisfactory renewal rent from an independent appraisal, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms or operate and integrate the acquired businesses, or to integrate our business with Windstream’s as a result of the merger, our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments, our ability to access debt and equity capital markets, the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates, our ability to retain our key management personnel, changes in the U.S. tax law and other federal, state or local laws, whether or not specific to real estate investment trusts, covenants in our debt agreements that may limit our operational flexibility, the possibility that we may experience equipment failures, natural disasters, cyber-attacks or terrorist attacks for which our insurance may not provide adequate coverage, the risk that we fail to fully realize the potential benefits of or have difficulty in integrating the companies we acquire, other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; and additional factors described in our reports filed with the U.S. Securities and Exchange Commission.

Uniti expressly disclaims any obligation to release publicly any updates or revisions to any of the forward-looking statements set forth in this press release to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

INVESTOR AND MEDIA CONTACTS:

Paul Bullington, 251-662-1512
Senior Vice President, Chief Financial Officer & Treasurer
paul.bullington@uniti.com

Bill DiTullio, 501-850-0872
Senior Vice President, Investor Relations & Treasury 
bill.ditullio@uniti.com

This press release was published by a CLEAR® Verified individual.

FAQ

What is the total value of Uniti Group's (UNIT) 2025 fiber securitization notes offering?

Uniti Group's fiber securitization notes offering totals $589 million, consisting of three classes of notes with different interest rates.

What are the interest rates for UNIT's 2025 securitization notes classes?

The notes include Class A-2 at 5.9% ($426M), Class B at 6.4% ($65M), and Class C at 9.0% ($98M), with a weighted average yield of 6.5%.

When will Uniti Group's (UNIT) 2025 securitization notes mature?

The notes have an anticipated repayment date in April 2030.

What assets secure UNIT's 2025 fiber securitization notes?

The notes are secured by fiber network assets and related customer contracts in Florida, Louisiana, Mississippi, and Alabama.

How will Uniti Group (UNIT) use the proceeds from the 2025 notes offering?

Uniti will use the proceeds to repay and terminate its existing ABS bridge facility and for general corporate purposes, including success-based capital investments and debt repayment.