Sprint - Nextel 2012 Annual Report Download - page 60

Table of Contents
expect to receive $4.9 billion from SoftBank's purchase of New Sprint common stock of which a portion of the funds may be used for the following
items that we would expect to occur in conjunction with the proposed transactions:
Although these additional cash outflows are currently expected to occur upon consummation of the proposed transactions, we have
approximately
$1.9 billion available under our new revolving credit facility as of February 28, 2013, in addition to the $4.9 billion capital contribution to
be received from SoftBank, and we expect to renegotiate our existing EDC and secured equipment credit facilities prior to consummation.
Our ability to fund our capital needs from external sources is ultimately affected by the overall capacity and terms of the banking and
securities markets, as well as our performance and our credit ratings. Given our recent financial performance as well as the volatility in these markets,
we continue to monitor them closely and to take steps to maintain financial flexibility and a reasonable cost of capital.
As of
December 31, 2012 , Moody's Investor Service, Standard & Poor's Ratings Services, and Fitch Ratings had assigned the following
credit ratings to certain of our outstanding obligations:
Downgrades of our current ratings alone do not accelerate scheduled principal payments of our existing debt. However, downgrades may
cause us to incur higher interest costs on our credit facilities and future borrowings, if any, and could negatively impact our access to the capital
markets.
A default under any of our borrowings could trigger defaults under our other debt obligations, which in turn could result in the maturities
being accelerated. Certain indentures that govern our outstanding notes also require compliance with various covenants, including covenants that
limit the Company's ability to sell all or substantially all of its assets, covenants that limit the ability of the Company and its subsidiaries to incur
indebtedness, and covenants that limit the ability of the Company and its subsidiaries to incur liens, as defined by the terms of the indentures. As of
December 31, 2012, we own a 50.4% economic interest in Clearwire. As a result, Clearwire could be considered a subsidiary under certain agreements
relating to our indebtedness. Whether Clearwire could be considered a subsidiary under our debt agreements is subject to interpretation. However,
Sprint does maintain the right to unilaterally surrender voting securities to reduce its voting security percentage below 50%, which could eliminate the
potential for Clearwire to be considered a subsidiary of Sprint. Certain actions or defaults by Clearwire would, if viewed as a subsidiary, result in a
breach of covenants, including potential cross
- default provisions, under certain agreements relating to our indebtedness. We believe the unilateral
rights significantly mitigate the possibility of an event that would cross - default against Sprint's debt obligations. However, upon consummation of the
Clearwire Acquisition, Clearwire will be considered a subsidiary of Sprint. Under our new revolving bank credit facility, we are currently restricted from
paying cash dividends because our ratio of total indebtedness to adjusted EBITDA exceeds
2.5 to 1.0.
CURRENT BUSINESS OUTLOOK
The Company expects 2013 consolidated segment earnings to be between $5.2 billion and $5.5 billion.
The above discussion is subject to the risks and other cautionary and qualifying factors set forth under “Forward - Looking Statements”
and Part I, Item 1A “Risk Factors” in this report.
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•
acquisition of the remaining equity interests of Clearwire Corporation that Sprint does not currently own for approximately $2.2 billion ;
•
payment of any outstanding balances of our EDC facility and secured equipment facility, which become due upon a change of control
and totaled
$796 million as of December 31, 2012; and/or
•
any optional repurchase requirement of the holders of the Clearwire Exchangeable Notes, which could result in a principal repayment of
up to $629 million.
Rating
Rating Agency
Issuer Rating
Unsecured Notes
Guaranteed Notes
Bank Credit
Facility
Outlook
Moody's
B1
B3
Ba3
Ba1
Review for Upgrade
Standard and Poor's
B+
B+
BB-
-
Review for Upgrade
Fitch
B+
B+
BB
BB
Review for Upgrade