Sprint - Nextel 2008 Annual Report Download - page 89

SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On August 11, 2009, the Company issued $1.3 billion in principal of senior notes due 2017. Interest is
payable semi-annually on February 15 and August 15 at a fixed rate of 8.375%. The Company may redeem some
or all of these notes at any time prior to maturity. The notes are unsecured senior obligations and rank equally
with the existing unsecured senior indebtedness. If a change of control event (as defined in the related indenture)
occurs, Sprint will be required to make an offer to repurchase the notes in cash at a price equal to 101% of their
principal amount. In May 2009, all outstanding 6.38% senior notes due 2009 were repaid totaling $600 million
plus accrued and unpaid interest. On September 16, 2009, all outstanding 5.25% convertible senior notes due
2010 were redeemed at 100% of the principal amount totaling $607 million plus accrued and unpaid interest.
In 2008, the Company made payments of $1.3 billion, $235 million and $250 million toward the early
redemption of 6.125% senior notes due November 2008, the extinguishment of US Unwired, Inc.’s 10% Second
Priority Senior Secured Notes due 2012 and the extinguishment of Alamosa (Delaware), Inc.’s 8.5% Senior
Notes due 2012, respectively.
Credit Facilities
As of December 31, 2009, $1.8 billion in letters of credit, including a $1.7 billion letter of credit
required by the FCC’s Report and Order to reconfigure the 800 MHz band, were outstanding under our
$4.5 billion revolving bank credit facility which expires on December 19, 2010. As a result, the Company had
$2.7 billion of borrowing capacity available under this revolving bank credit facility as of December 31, 2009.
The terms of this loan provide for an interest rate equal to the London Interbank Offered Rate (LIBOR) plus a
spread that varies depending on the Company’s credit ratings. The unsecured loan agreement with Export
Development Canada will mature in March 2012 and has terms similar to those of the revolving bank credit
facility.
In February 2008, we drew down $2.5 billion under our revolving bank credit facility. The proceeds
were used to repay $1.7 billion in senior notes during the second and third quarters of 2008. During the second
half of 2008, we repaid $1.5 billion of our revolving bank credit facility and, in the fourth quarter of 2009, we
repaid the remaining outstanding balance of $1.0 billion.
Commercial Paper
In 2008, we repaid in full our commercial paper outstanding under our commercial paper program
which commenced in 2006. The $2.0 billion program was backed by our revolving credit facility and reduced the
amount we could borrow under the facility to the extent of the commercial paper outstanding.
Financing, Capital Lease and Other Obligations
In 2008, we closed a transaction with TowerCo Acquisition LLC under which we sold approximately
3,000 cell sites, and subsequently leased space on those cell sites over a period of ten years with renewal options
for an additional 20 years. Due to our continued involvement with the property sold, we accounted for this
transaction as a financing. The cell sites continue to be included in property, plant and equipment. Our capital
lease and other obligations are primarily for the use of communication switches.
Covenants
As of December 31, 2009, the Company is in compliance with all restrictive and financial covenants
associated with its borrowings. The maturity dates of the borrowings may accelerate if we do not comply with
these covenants. A default under any of our borrowings could trigger defaults under other debt obligations, which
in turn could result in the maturities being accelerated. The indentures that govern our outstanding senior notes
also require compliance with various covenants, including limitations on the incurrence of indebtedness and liens
by the Company and its subsidiaries.
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