Uniti achieves target leverage range, aims for 5.75x for flexibility

By Devika Patel

Knoxville, Tenn., Jan. 7 – Uniti Group Inc. is right in the middle of its target leverage ratio range of 5.5x to 6x, with the ratio currently sitting at 5.8x, but the company plans to deleverage further to 5.75x in the “not-too-distant future” in order to achieve more flexibility regarding the dividend policy.

“We’re very, very pleased with where our leverage is today and where our liquidity is,” senior vice president, treasurer and chief financial officer Paul Bullington said at the Citi 2022 AppsEconomy Conference on Thursday.

“The target range is at 5.5x to 6x EBITDA leverage on net debt and we are right in the middle of that range.

“We’re somewhere around that, 5.8x, we’re right in the middle of that range, so we’re very comfortable with the progress we’ve made deleveraging and getting into the meat of the range that we think is the appropriate and comfortable range for the business,” he said.

The company wants leverage to fall even further and believes it is close to achieving a 5.75x ratio, which would result in eliminating a debt covenant that affects the dividend.

“There is a particular debt covenant that we have with some of our bonds that requires us to hit a 5.75x ratio in order to free up some flexibility around the dividend,” Bullington said.

“It doesn’t impair our ability to refinance our debt or anything like that, but in terms of the dividend, until we hit that 5.75x point, we’re restricted to paying the minimum statutory dividend required to maintain our REIT status, which is 90% of pre-taxable income.

“We’re really close to that point and so I think the time is coming in the not-too-distant future where it isn’t just an academic discussion of what should we do with the dividend,” he said.

“Our board will actually have the ability to set that dividend policy without that constraint.

“I think we’re close to that and I think the time is coming when we would have that restriction lifted from us,” Bullington said.

Uniti is a real estate investment trust based in Little Rock, Ark.

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