May 28, 2024 – UScellular (NYSE: USM) announced they have entered into a definitive agreement to sell UScellular's wireless operations and select spectrum assets to T-Mobile for a purchase price of $4.4 billion, including a combination of cash and up to approximately $2 billion of assumed debt. Under the terms of the agreement, T-Mobile will acquire UScellular's wireless operations and approximately 30% of spectrum assets across several spectrum bands. In connection with the transaction, T-Mobile expects to conduct an exchange offer under which holders of certain UScellular debt with a face value of approximately $2 billion will be offered the opportunity to participate in an exchange offer of their UScellular debt for T-Mobile debt.
As of market close May 28, 2024, USM’s public debt traded up an average of 18.50%[1], as the credit spreads on TDS and USM’s debt instruments compressed towards the spreads on T-Mobile’s debt. We believe active managers of preferred stocks can offer shareholders total return opportunities by seeking exposure to corporate action events (and valuation gaps) such as this. As capital market activity continues to rise in 2024, we believe there will be more asset sales and acquisitions of entire companies as private equity firms and public companies arbitrage valuation gaps and look for opportunities to deploy cash balances.
Per public holdings, as of May 28, 2024, Infrastructure Capital Advisors, LLC (“ICA”) beneficially holds positions in TDS and USM.
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Sources
[1] The 18.50% change in price reflects the one-day average change in price of USM debt. For the one-day change in price, UZE traded up 18.10%, UZF traded up 18.44%, and UZD traded up 17.91%; for an average one-day change in price of 18.50%.
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Infrastructure Capital Advisors, LLC (ICA) is an SEC-registered investment advisor that manages exchange traded funds (ETFs) and a series of hedge funds. The firm was formed in 2012 and is based in New York City. ICA seeks current income opportunities as a primary objective in most, but not all, of ICA's investing activities.
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The information contained herein represents our subjective belief and opinions and should not be construed as investment advice. The information and opinions provided should not be taken as specific advice on the merits of any investment decision. Investors should make their own decisions regarding any investments mentioned, and their prospects based on such investors’ own review of publicly available information and should not rely on the information contained herein. Infrastructure Capital Advisors, LLC nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein. This data includes information based on data and calculations sourced from Bloomberg and third-party sources. We believe that the data is reliable, we have not sought, nor have we received, permission from any third-party to include their information in this article. Comparative fund information is provided for informational purposes only, funds may have different characteristics and risks which are not presented. Many of the statements in this commentary reflect our subjective belief.
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