Crown Castle International Corp. NYSE: CCI

Transcription

1 Crown Castle International Corp. NYSE: CCI Securitization Closing Announcement Analyst Call June 9, 2005

2 Forward-Looking Information This presentation contains forward-looking statements and information that are based on our management s current expectations. Such statements include, but are not limited to, plans, projections and estimates regarding (i) growth in our business, (ii) purchases of our securities, (iii) use of proceeds of the Notes, (iv) the investment of cash flow, (v) the issuance of additional Notes, (vi) issuance of dividends, (vii) acquisition of or investment in towers and other assets, (viii) site rental cost of operations, (ix) site rental gross margin, (x) Adjusted EBITDA, (xi) interest expense and amortization of deferred financing costs, (xii) sustaining capital expenditures, (xiii) recurring cash flow (including on an annualized and per share basis), (xiv) revenue enhancing capital expenditures on existing sites, (xv) land purchases, (xvi) new site construction, and (xvii) revenue generating capital expenditures. Such forward-looking statements are subject to numerous risks, uncertainties and assumptions, including prevailing market conditions and other factors. Should one of more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors which could affect our results is included in our filings with the Securities and Exchange Commission. The Company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation includes certain non-gaap financial measures, including free cash flow and Adjusted EBITDA. Tables reconciling such non-gaap financial measures are available under the investor section of the Company s website at 2

3 Overview of Notes Class Ratings (Moody's/Fitch) Amount ($mm) Weighted Avg. Life (Yrs.) Loan to Asset Value A-FX Aaa / AAA $ A-FL Aaa / AAA $ B Aa2 / AA $ C A2 / A $ D Baa2 / BBB $ Total $1, % (1) Value is defined as asset value for Crown Castle International (ticker:cci) and is based on 215.6mm outstanding shares as disclosed in Crown Castle s press release and a stock price of $18.15 as of close of business on June 7, Asset value is calculated as market value of equity plus net debt, minority interest and convertible preferred stock of $2,263mm (pro forma for transactions announced in Crown Castle s June 8, 2005 press releases) as of March 31,

4 Highlights Q3 '02 Pro forma '05 (2) Interest per share $1.53 $0.50 Interest coverage (3) 1.0x 3.0x Annualized interest expense $331mm $107mm Net leverage (4) 10.2x 7.3x All Notes are rated investment grade with 60%+ rated AAA/Aaa by Fitch and Moody s Significantly more flexibility to invest the cash flow produced in activities that are expected to maximize recurring cash flow per share Reduces annualized run-rate interest expense (1) and amortization of deferred financing costs from $157mm to $107mm (8.8% avg. coupon to 5.0% avg. coupon) The high grade debt market tends to have less credit spread volatility and greater liquidity than the high yield debt market Structure permits the issuance of additional pari passu notes which will allow a constant level of leverage to cash flow ratio (1) Q1 05 annualized run-rate interest expense and amortization of deferred financing costs compared to pro forma interest expense and amortization of deferred financing costs detailed in the June 8, 2005 press releases (2) Pro forma calculations based on the June 8, 2005 press releases (3) LQA Adjusted EBITDA / Interest expense (4) Net debt + preferred stock / LQA Adjusted EBITDA 4

5 High Asset Quality Overview of Borrowers Borrowers holds substantially all US tower assets 93% of consolidated site rental revenues and 94% of consolidated site rental gross margin 75% of US towers have Verizon or Cingular as an anchor tenant 96% of US tower revenues are derived from wireless telephony and 73% of US tower revenues are from investment grade tenants 71% of US towers are located in the Top 100 BTAs Nearly all towers are owned (1) (1) Including the sites acquired through the 100 year pre-paid lease with Bell South 5

6 Summary Transaction Terms Offering: The Issuer Entity (1) : Joint Bookrunners: Anticipated Maturity/Amortization: Use of Proceeds: Call Protection: Yield Maintenance: $1,900mm Senior Secured Tower Revenue Notes Crown Castle Towers LLC (a bankruptcy remote SPE) Morgan Stanley & Co. Incorporated and Lehman Brothers Inc. June 2010 Anticipated Repayment Date ( ARD ) structure (5-year bullet, interest only). If not refinanced in year 5 (i) all excess cash flow swept to amortize Notes sequentially and (ii) incremental penalty coupon accrues at minimum of 500 bps. Refinance existing indebtedness and general corporate purposes 2-year lock-out T+50bps discount rate through 90 days prior to the ARD (1) In addition, certain subsidiaries of the Issuer Entity will also be Issuers in respect of the Notes 6

7 Simplified Capital Structure (1) Crown Castle International Corp. $76.3mm high-yield and convertible notes (avg. coupon of 5.0%) $508.4mm preferred stock (avg. coupon of 7.0%) Crown Castle Australia (77.6%) Holds all Australia tower assets Crown Castle Towers LLC $1.9B Senior Secured Tower Revenue Notes (avg. coupon of 4.89%) Holds substantially all US tower assets Crown Castle Mobile Media (99%) (US nationwide 5MHz spectrum license) Crown Castle Solutions Other Investments (1) Capital structure has been simplified for presentation purposes and does not reflect all of Crown Castle s subsidiaries 7

8 Cash Trap Mechanics Ratio: Issuer Entity Annualized Run Rate Net Tower Cash Flow (2) to Next 12 Months Interest Consolidated Annualized Adjusted Consolidated EBITDA to Next 12 Months Consolidated Interest Expense Cash Trap Trigger: 1.75x (1) 2.0x (1) Early Amortization Trigger: 1.45x (Notes pre-paid sequentially with yield maintenance) N/A Comments: Issuer level test always takes precedence over Consolidated level test Even if cash trap is triggered, cash may be released solely to meet Crown Castle International debt service obligations (1) Cash trap continues until ratio exceeds trigger level for 2 consecutive quarters (2) Cash site rental revenues less cash site rental cost of operations less 10%of cash site rental revenues (management fee) 8

9 Focused on Shareholder Value Crown Castle believes the best way to drive shareholder value is to maximize recurring cash flow (RCF) per share (1) Annualized second half 05 outlook is approximately $0.92 per share of RCF Expect RCF per share to grow approximately 20 to 25% per year Growth in core tower business Investment of RCF Investment of borrowings on growth in core assets Able to invest cash to purchase shares, acquire or build towers, issue dividends and make other investments that are expected to maximize RCF per share (1) Recurring cash flow per share defined as Adjusted EBITDA less sustaining capital expenditures less interest expense and amortization of deferred financing costs divided by shares outstanding 9

10 Appendices

11 Simplified Debt Structure $ in millions 3/31/05 balance sheet Pro forma balance sheet (1) 4% Convertible Senior Notes due 2010 $88.5 Senior Secured Tower Revenue Notes, Series $1, /8% Senior Discount Notes due 2011 $11.3 4% Convertible Senior Notes due 2010 $64.2 9% Senior Notes due 2011 $26.1 Other high-yield notes $ /4% Senior Discount Notes due 2011 $10.7 Total $1, /2% Senior Notes due 2011 $ /4% Senior Notes due 2011 $ /8% Senior Notes due 2011 $ % Senior Notes due 2013 $ % Series B Senior Notes due 2013 $300.0 Crown Atlantic $158.0 Total $1,734.9 (1) Pro forma 3/31/2005 for the issuance of $1.9 billion in securitized notes, the tender and redemption of certain high-yield notes discussed in this release and the repayment of the Crown Atlantic credit facility 11

12 Significant Interest Reduction $ in millions Pro forma interest expense Annualized run-rate 3/31/2005 Pro forma (1) Senior Secured Tower Revenue Notes, Series $0.0 $93.3 4% Convertible Senior Notes due 2010 $3.5 $ /8% Senior Discount Notes due 2011 $1.2 $0.0 9% Senior Notes due 2011 $2.4 $ /4% Senior Discount Notes due 2011 $1.2 $ /2% Senior Notes due 2011 $0.5 $ /4% Senior Notes due 2011 $46.0 $ /8% Senior Notes due 2011 $38.2 $ % Senior Notes due 2013 $22.5 $ % Series B Senior Notes due 2013 $22.5 $0.0 Crown Atlantic $9.0 $0.0 Total cash interest expense $146.9 $97.1 Imputed interest for Australia rent free leases $4.0 $4.0 Deferred financing costs $6.0 $6.2 Total non-cash interest expense $10.0 $10.2 Interest expense and amortization of deferred financing costs $156.9 $107.3 (1) Pro forma 3/31/2005 for the issuance of $1.9 billion in securitized notes, the tender and redemption of certain high-yield notes discussed in this release and the repayment of the Crown Atlantic credit facility. 12

13 2005 Outlook $ in millions Second Half 2005 Full Year 2005 Site rental revenue $289 to 299 $ 575 to 585 Site rental cost of operations (exclusive of depreciation, amortization and accretion) $88 to 98 $ 185 to 195 Site rental gross margin $193 to 208 $ 385 to 400 Adjusted EBITDA $155 to 165 $ 310 to 320 Interest expense and amortization of deferred financing costs $55 to 62 $ 130 to 137 Sustaining capital expenditures $2 to 6 $10 to 14 Recurring cash flow $94 to 104 $ 165 to 175 Revenue generating capital expenditures: Revenue enhancing on existing sites $9 to 19 $ 20 to 30 Land purchases $3 to 8 $ 7 to 12 New site construction $10 to 15 $ 20 to 25 Total revenue generating capital expenditures $22 to 42 $ 47 to 67 13

14 Non-GAAP Financial Measures This document includes presentations of Adjusted EBITDA and recurring cash flow, which are non-gaap financial measures. Crown Castle defines Adjusted EBITDA as net income (loss) plus cumulative effect of change in accounting principle, income (loss) from discontinued operations, minority interests, provision for income taxes, interest expense, amortization of deferred financing costs and dividends on preferred stock, interest and other income (expense), depreciation, amortization and accretion, non-cash general and administrative compensation charges, asset write-down charges and restructuring charges (credits). Adjusted EBITDA is not intended as an alternative measure of operating results (as determined in accordance with Generally Accepted Accounting Principles (GAAP)). Adjusted EBITDA is presented as additional information because management believes it to be a useful indicator of the current financial performance of our core businesses. In addition, Adjusted EBITDA is the measure of current financial performance generally used in our debt covenant calculations. Crown Castle defines recurring cash flow to be Adjusted EBITDA, less interest expense and less sustaining capital expenditures. Each of the amounts included in the calculation of recurring cash flow are computed in accordance with GAAP, with the exception of sustaining capital expenditures, which is not defined under GAAP. Sustaining capital expenditures are defined as capital expenditures (determined in accordance with GAAP) which do not increase the capacity or term of an asset. Recurring cash flow is not intended as an alternative measure of cash flow from operations (as determined in accordance with GAAP). Recurring cash flow is provided as additional information because management believes it to be useful in providing investors with a reasonable estimate of our cash flow available for discretionary investments (including expansion projects, improvements to existing sites, debt repayment, securities purchases and dividends) without reliance on additional borrowing or the use of our cash and cash equivalents. Our measures of Adjusted EBITDA and recurring cash flow may not be comparable to similarly titled measures of other companies. The tables set forth below reconcile these non-gaap financial measures to comparable GAAP financial measures. 14

15 Non-GAAP Reconciliations Adjusted EBITDA for the six months and the year ending December 31, 2005 is forecasted as follows: (dollars in millions) Net income (loss) Minority interests Credit (provision) for income taxes Interest expense and amortization of deferred financing costs Interest and other income (expense) Depreciation, amortization and accretion Operating non-cash compensation charges Asset write-down charges Restructuring charges (credits) Adjusted EBITDA Second Half 2005 $(68.0) to (34.3) 0.0 to (2.0) 0.25 to to to to to to $155.0 to $165.0 Full Year 2005 $(434.0) to (389.5) 0.0 to (4.0) 0.5 to to to to to to to 9.0 $310.0 to Recurring Cash Flow for the six months and the year ending December 31, 2005 is forecasted as follows: (dollars in millions) Net cash provided by operating activities $95.0 to $159.0 to Add: Other adjustments (1) 0.0 to to 20.0 Less: Sustaining capital expenditures Recurring Cash Flow Second Half 2005 (2.0) to (6.0) $94.0 to Full Year 2005 (10.0) to (14.0) $165.0 to (1) Other adjustments include adjustments for changes in assets and liabilities, excluding the effects of acquisitions, restructuring charges and provision for income taxes. 15

16 Non-GAAP Reconciliations Recurring Cash Flow for the six months and the year ending December 31, 2005 is forecasted as follows: (dollars in millions) Second Half 2005 Full Year 2005 Adjusted EBITDA Less: Interest expense and amortization of deferred financing costs Less: Sustaining capital expenditures Recurring Cash Flow $155.0 to (55.0) to (62.0) (2.0) to (6.0) $94.0 to $310.0 to (130.0) to (137.0) (10.0) to (14.0) $165.0 to Pro forma shares outstanding as of March 31, 2005 is calculated as follows: (shares in millions) Shares Shares outstanding as of March 31, Shares purchased during the second quarter 2005 Pro forma shares outstanding (8.0) Recurring Cash Flow Per Share for the six months ending December 31, 2005 is forecasted as follows: (dollars and shares in millions) Second half 2005 recurring cash flow Multiply by two Annualized second half 2005 recurring cash flow Pro forma shares outstanding Recurring Cash Flow Per Share Second Half 2005 $94.0 to $188.0 to $0.87 to

17 Other Calculations Sustaining Capital Expenditures for the six months and the year ending December 31, 2005 is forecasted as follows: (dollars in millions) Capital expenditures Less: Revenue enhancing on existing sites Less: Land purchases Less: New site construction Sustaining capital expenditures Second Half 2005 $24.0 to 48.0 (9.0) to (19.0) (3.0) to (8.0) (10.0) to (15.0) $2.0 to 6.0 Full Year 2005 $57.0 to 81.0 (20.0) to (30.0) (7.0) to (12.0) (20.0) to (25.0) $10.0 to 14.0 Site Rental Gross Margin for the six months and the year ending December 31, 2005 is forecasted as follows: (dollars in millions) Site rental revenue Less: Site rental cost of operations (exclusive of depreciation, amortization and accretion) Site rental gross margin Second Half 2005 $289.0 to (88.0) to (98.0) $193.0 to Full Year 2005 $575.0 to (185.0) to (195.0) $385.0 to

18 Other Calculations Adjusted EBITDA for the quarter ending September 30, 2002 is calculated as follows: (dollars in millions) Q Net income (loss) ($65.6) Minority interests $0.1 Credit (provision) for income taxes $0.1 Interest expense and amortization of deferred financing costs $78.1 Interest and other income (expense) ($20.6) Depreciation, amortization and accretion $77.3 Non-cash compensation charge $1.4 Asset write-down charges $14.5 Restructuring charges $0.7 Adjusted EBITDA $85.9 Interest per share for the periods ending September 30, 2002 and pro forma March 31, 2005 is calculated as follows: (dollars in millions, except per share amounts) Q Pro forma 2005 Interest expense and amortization of deferred financing costs $82.9 N/A Annualized interest expense $331.4 $107.0 Shares outstanding Interest expense and amortization of deferred financing costs per share $1.53 $0.50 Interest coverage for the periods ending September 30, 2002 and pro forma March 31, 2005 is calculated as follows: (dollars in millions, except per share amounts) Q Pro forma 2005 Adjusted EBITDA $85.9 N/A Annual Adjusted EBITDA $343.7 $320.0 Annualized interest expense and amortization of deferred financing costs $331.4 $107.0 Interest coverage 1.0x 3.0x 18