WASHINGTON -- Sprint Cellular Co. filed with the Securities and Exchange Commission yesterday to sell up to $800 million in debt securities as part of a spinoff of the company from Sprint Corp.
Chicago-based Sprint Cellular will use proceeds from the sale, along with other borrowing, to repay $1.4 billion in debt it owes the parent company and its subsidiaries, the company said in the filing.
As of Sept. 30, Sprint Cellular had $1.52 billion in outstanding intercompany debt, the filing said. The parent company and subsidiaries will, in effect, wipe out any debt above the $1.4 billion level after the sale, the cellular company said.
Sprint Cellular expects the spinoff to be completed by the first quarter of 1996 and plans the closing to be timed with the closing of the debt offering. Senior notes that mature in 2003 and 2006 will be sold in the offering.
Before completing the spinoff, the Sprint Corp. board of directors must give the transaction final approval and the spinoff must receive a tax-free ruling from the Internal Revenue Service, the company said.
Sprint Corp., headquartered in Westwood, Kan., announced the spinoff in July and valued the transaction at $4 billion at the time.
The parent company was forced to divest itself from the cellular operation because of federal regulations prohibiting any overlap of the company's cellular and new personal communications service markets.
Newly auctioned licenses for personal communications service, often called PCS, have allowed telephone companies to start building businesses in the next generation of U.S. wireless services.