Can You Hear Me Now?* Paulson Joins Schoenfeld In Opposing MetroPCS/T-Mobile Deal


*Yes, I know that is for Verizon, but neither company has such a snappy catchphrase.

Paulson & Co., of multibillion dollar mortgage short fame, owns about 9.9% of the MetroPCS outstanding stock, making it the largest shareholder. Paulson sent some static over the wires in a letter to the MetroPCS (PCS) board opposing its announced merger with T-Mobile because:

  • the deal structure packs on too much debt, more than double Verizon’s (VZ) debt as a ratio to estimated EBITDA
  • the interest rate on the debt (7%) is too high. Sprint’s (S) 7% 2020 notes only yield 4.2%, which itself is double AT&T’s (T) 2020 notes
  • the equity split with T-Mobile is unfair on the basis of MetroPCS’ contribution to the combined company’s value (42%) versus the MetroPCS shareholders stake in the combined company (26%). In addition, MetroPCS is doing well while T-Mobile is struggling

Paulson said they would support a restructured deal with less debt at a better interest rate.

P. Schoenfeld Asset Management LP, another large MetroPCS shareholder, has also opposed the merger and is soliciting proxies in opposition.

T-Mobile gets you fast songs. That should count for something.

Paulson & Co. Letter to MetroPCS
P. Schoenfeld Proxy Statement

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