Sprint - Nextel 2011 Annual Report Download - page 87

Table of Contents
SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On November 9, 2011, the Company issued $1.0 billion in principal of 11.50% senior notes due 2021 and $3.0 billion in principal of 9.00% guaranteed notes
due 2018. Interest is payable semi-annually on May 15 and November 15. The Company, at its option, may redeem some or all of either issue of the notes at any time
prior to maturity. If a change of control event (as defined in the Supplemental Indentures) occurs prior to the Company being rated “investment grade” by the applicable
rating agencies, the holders will have the right, subject to certain conditions, to require the Company to repurchase their notes at a purchase price equal to 101% of the
aggregate principal amount of notes repurchased plus accrued and unpaid interest, as of the date of repurchase. As with other of our indentures, the Supplemental
Indentures also contain covenants that limit the Company's ability to sell all or substantially all of its assets or to merge or consolidate with or into other companies and
certain of its subsidiaries have restrictions on granting liens to other creditors. The 2018 Guaranteed Notes are guaranteed by the company's wholly-owned subsidiaries
that guarantee its existing credit agreements.
On January 31, 2011, the Company paid $1.65 billion in principal plus accrued and unpaid interest on its outstanding Sprint Capital Corporation 7.625% senior
notes as scheduled. In addition, on December 29, 2011, we redeemed all of our outstanding $2.0 billion Sprint Capital Corporation 8.375% senior notes due March 2012
for principal plus accrued and unpaid interest in addition to a $33 million loss recognized as a result of the early retirement. On June 28, 2010, the Company paid $750
million in principal plus accrued and unpaid interest on its outstanding floating rate senior notes as scheduled. Our weighted average effective interest rate related to our
notes and credit facilities was 7.0% in 2011 and 6.9% in 2010.
Credit Facilities
In October 2011, our credit facility was amended to prospectively redefine earnings before interest, taxes, depreciation and amortization and certain other non-
recurring items (adjusted EBITDA) within the ratio of total indebtedness to trailing four quarters adjusted EBITDA to exclude costs comprising equipment net subsidy, as
defined by the amended agreement, to the extent such costs exceed $1.1 billion in any of the six consecutive fiscal quarters ending March 31, 2013. The amount added
back related to this exclusion cannot exceed $1.75 billion in any four consecutive fiscal quarters and is limited to $2.7 billion in the aggregate for the six consecutive fiscal
quarters ending March 31, 2013. The borrowing capacity under the facility was also increased by $150 million to $2.2 billion. As of December 31, 2011, $1.1 billion in
letters of credit, which includes a $1.0 billion letter of credit required by the FCC's Report and Order to reconfigure the 800 MHz band, were outstanding under our $2.2
billion revolving bank credit facility. As a result, the Company had $1.1 billion of borrowing capacity available under this revolving bank credit facility as of
December 31, 2011. The terms of this credit facility 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.
On November 23, 2011, the Company paid $250 million, plus accrued and unpaid interest, of the amounts outstanding under the Export Development Canada
(EDC) loan due 2012. As of December 31, 2011, the unsecured loan agreement with EDC is fully drawn as repayments of outstanding amounts cannot be re-drawn. In
addition, the EDC loan agreement was amended in December 2011 to provide for terms similar to those of the amended revolving bank credit facility.
Financing, Capital Lease and Other Obligations
We have approximately 3,000 cell sites, which we sold and subsequently leased back space. Terms extend through 2021, with renewal options for an
additional 20 years. The cell sites continue to be reported as part of our property, plant and equipment due to our continued involvement with the property sold and the
transaction is accounted for as a financing. Our capital lease and other obligations are primarily for the use of communication switches.
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