Sprint - Nextel 2006 Annual Report Download - page 115

Bank Credit Facilities
Our bank credit facility provides for total unsecured financing capacity of $6.0 billion. As of December 31,
2006, we had $2.6 billion of outstanding letters of credit, including a $2.5 billion letter of credit that is
required by the FCC’s Report and Order, and $514 million in commercial paper, net of discounts, backed by
the facility, resulting in $2.9 billion of available revolving credit. We also have an additional $16 million of
outstanding letters of credit as of December 31, 2006 used for various financial obligations that are not backed
by our bank credit facility.
On December 19, 2005, we entered into our bank credit facility, which consisted not only of the five year
$6.0 billion revolving credit facility, but also a 364 day $3.2 billion term loan. The terms of this loan provide
for an interest rate equal to the London Interbank Offered Rate, or LIBOR, or Prime Rate plus a spread that
varies depending on our credit ratings. This bank credit facility does not include a rating trigger that would
allow the lenders involved to terminate the facility in the event of a credit rating downgrade. The $6.0 billion
revolving credit facility is also subject to a facility fee on the total facility which is payable quarterly. Facility
fees can vary between 4 to 15 basis points based upon our credit ratings. This facility replaced an existing
credit agreement, which included a $4.0 billion revolving credit facility and a $2.2 billion term loan.
Our credit facility requires compliance with a financial ratio test as defined in the credit agreement. The
maturity dates of the loans may accelerate if we do not comply with the financial ratio test. As of
December 31, 2006, we were in compliance with the financial ratio test under our credit facility. We are also
obligated to repay the loans if certain change of control events occur. Borrowings under the facility are
unsecured.
The credit facility also contains covenants which limit our ability and the ability of some of our subsidiaries to
incur additional indebtedness, including guaranteeing obligations of other entities and creating liens, to
consolidate, merge or sell all or substantially all of our and their assets and to enter into transactions with
affiliates.
Our ability to borrow additional amounts under the credit facility may be restricted by provisions included in
some of our public notes that limit the incurrence of additional indebtedness in certain circumstances. The
availability of borrowings under this facility also is subject to the satisfaction or waiver of specified borrowing
conditions. As of December 31, 2006, we have satisfied the conditions under this facility.
During the second quarter 2006, we retired our $3.2 billion term loan with a portion of the proceeds received
in connection with the spin-off of Embarq. See note 2 for further details on the spin-off of Embarq.
On August 1, 2006, we repaid and terminated a credit facility that we assumed as part of the Nextel Partners
acquisition, which had a $500 million outstanding term loan and provided for a $100 million revolving credit
facility, which had no outstanding borrowings against it.
In 2005, we entered into a revolving credit facility of $1.0 billion. This facility was unsecured and was
structured as a 364-day credit line with a subsequent one-year, $1.0 billion term-out option, which had no
borrowings drawn against it and was permitted to expire during the second quarter 2006.
Commercial Paper
In April 2006, we commenced a commercial paper program, which has reduced our borrowing costs by
allowing us to issue short-term debt at lower rates than those available under our $6.0 billion revolving credit
facility. The $2.0 billion program is backed by our revolving credit facility and reduces the amount we can
borrow under the facility to the extent of the commercial paper outstanding. As of December 31, 2006, we had
$514 million of commercial paper outstanding, net of discounts, included in the current maturities of long-
term debt with a weighted average interest rate of 5.515% and a weighted average maturity of about 47 days.
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SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)