Sprint - Nextel 2007 Annual Report Download - page 113

SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In 2006, our 7.125% and 4.78% senior notes matured with an aggregate principal balance of $1.6 billion,
which we paid in cash. We paid a total of $2.7 billion in cash for our 2006 early redemptions, that we redeemed
in their entirety as follows:
• redeemed all of our outstanding 9.5% senior notes due 2011, with an outstanding principal balance of
$85 million, and our 6.0% senior notes due 2007, with an outstanding principal balance of $1.6 billion;
• redeemed Nextel Partners’ 1.5% convertible senior notes due 2008, with an outstanding principal
balance of $140 million;
• redeemed Alamosa’s 13.625% senior notes due 2011, 12.0% senior notes due 2009, and 12.5% notes
due 2011, with an aggregate outstanding principal balance of $247 million;
• redeemed US Unwired’s first priority senior secured floating rate notes due 2010, with an outstanding
principal balance of $125 million, and IWO Holdings Inc.’s 10.75% senior discount notes due 2015,
with an outstanding principal balance of $140 million; and
• redeemed the 9.375% senior subordinated secured notes due 2009, and floating rate senior secured notes
due 2011, of an Alamosa subsidiary, with an aggregate outstanding principal balance of $334 million.
Our weighted average effective interest rate related to our senior notes was 7.0% in 2007 and 7.1% in 2006.
The effective interest rate includes the effect of interest rate swap agreements accounted for as fair value hedges.
See note 9 for additional information regarding interest rate swaps.
Credit Facilities
Our revolving bank credit facility provides for total unsecured financing capacity of $6.0 billion. As of
December 31, 2007, we had $2.6 billion of outstanding letters of credit, which includes a $2.5 billion letter of credit
required by the FCC’s Report and Order, and $379 million in commercial paper backed by this facility, resulting in
$3.0 billion of available revolving credit. We also had an additional $8 million of outstanding letters of credit as of
December 31, 2007 used for various financial obligations that are not backed by our bank credit facility.
In March 2007, we entered into a $750 million unsecured loan agreement with Export Development Canada.
As of December 31, 2007, we had borrowed all $750 million available under this agreement and this loan will
mature in March 2012. The terms of this loan provide for an interest rate equal to LIBOR plus a spread that
varies depending on our credit ratings. We may choose to prepay this loan, in whole or in part, at any time.
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 LIBOR or the 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,
2007, 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.
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