Sprint - Nextel 2012 Annual Report Download - page 144

Table of Contents
SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
principal plus accrued and unpaid interest in addition to a
$33 million loss recognized as a result of the early retirement.
On June 8, 2012, the Company redeemed $1.0 billion of the $1.473 billion then outstanding Nextel Communications, Inc. 6.875% notes due
2013 plus accrued and unpaid interest. On August 24, 2012, the Company redeemed all $473 million of the then outstanding Nextel Communications,
Inc.
6.875% notes due 2013 and $1.0 billion of the approximately $2.1 billion then outstanding Nextel Communications, Inc. 7.375% notes due 2015, plus
accrued and unpaid interest on both series of notes.
On November 19, 2012, the Company redeemed all $1.1 billion of the then outstanding Nextel Communications, Inc. 7.375% notes due 2015
and the remaining
$1.2 billion in principal on its outstanding Nextel Communications, Inc. 5.95% notes due 2014, plus accrued and unpaid interest on
both series of the notes.
Credit Facilities
In May 2012, certain of our subsidiaries entered into a
$1.0 billion secured equipment credit facility to finance equipment - related purchases
from Ericsson for Network Vision. The cost of funds under this facility includes a fixed interest rate of
2.03% , and export credit agency premiums and
other fees that, in total, equate to an expected effective interest rate of approximately 6% based on assumptions such as timing and amounts of
drawdowns. The facility is secured by a lien on the equipment purchased and is fully and unconditionally guaranteed by the parent. The facility is
equally divided into two consecutive tranches of
$500 million , with drawdown availability contingent upon Sprint's equipment - related purchases from
Ericsson, up to the maximum of each tranche. The first tranche of
$500 million may be drawn upon through May 31, 2013, while the second tranche of
$500 million may be drawn upon beginning April 1, 2013 through May 31, 2014. Interest and fully - amortizing principal payments are payable semi -
annually on March 30 and September 30, with a final maturity date of March 2017 for both tranches. As of December 31, 2012 , we had drawn
approximately
$296 million on the first tranche of the facility. The covenants under the secured equipment credit facility are similar to those of our
revolving bank credit facility, our EDC facility, and those of our guaranteed notes due 2018 and 2020.
As of December 31, 2012 , approximately $925 million in letters of credit were outstanding under our $2.2 billion revolving bank credit facility,
including the letter of credit required by the 2004 FCC Report and Order to reconfigure the 800 MHz band (the "Report and Order"). As a result, the
Company had
$1.3 billion of borrowing capacity available under the revolving bank credit facility as of December 31, 2012 . Our revolving bank credit
facility expires in October 2013, although we expect to enter into a new facility prior to expiration. The terms of the revolving bank 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. Certain
of our domestic subsidiaries have guaranteed the revolving bank credit facility. The Company's unsecured loan agreement with EDC has terms similar
to those of the revolving bank credit facility, except that under the terms of the EDC loan, repayments of outstanding amounts cannot be re
- drawn. As
of
December 31, 2012 , the EDC loan was fully drawn. In addition, as of December 31, 2012 , up to $204 million was available through May 31, 2013 under
the first tranche of our secured equipment credit facility, although the use of such funds is limited to equipment - related purchases from Ericsson.
Under the terms of Sprint's and its consolidated subsidiaries' existing credit facilities, if a change of control occurs, including the SoftBank
Merger, we will be required to repay all outstanding balances in the amount of $796 million as of December 31, 2012 , under the EDC facility, the secured
equipment credit facility, and our revolving bank credit facility, as well as letters of credit issued of approximately
$925 million under our revolving
bank credit facility. Sprint intends to amend these facilities to, among other things, exclude the SoftBank Merger from the change of control provisions.
Financing, Capital Lease and Other Obligations
We have approximately
3,000 cell sites that we sold and subsequently leased back. Terms extend through 2021, with renewal options for an
additional
20 years. These 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 wireless network
equipment.
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