Sprint - Nextel 2013 Annual Report Download - page 148

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Credit Facilities
The Company has a
$3.0 billion unsecured revolving bank credit facility that expires in February 2018. Borrowings under the revolving bank credit
facility bear interest at a rate equal to the London Interbank Offered Rate (LIBOR) plus a spread that varies depending on the Company
’ s credit ratings. As of
December 31, 2013 , approximately $914 million in letters of credit were outstanding under this credit facility, including the letter of credit required by the Report
and Order (see Note 12. Commitments and Contingencies). As a result of the outstanding letters of credit, which directly reduce the availability of borrowings
under this facility, the Company had approximately
$2.1 billion of borrowing capacity available as of December 31, 2013 . The unsecured loan agreement with
Export Development Canada (EDC Agreement) and secured equipment credit facility were amended on March 12, 2013, and June 24, 2013, respectively to
provide for terms similar to those of the revolving bank credit facility, except that under the terms of the EDC Agreement and the secured equipment credit
facility, repayments of outstanding amounts cannot be re
- drawn. As of December 31, 2013 , the EDC Agreement was fully drawn.
As of
December 31, 2013 , we had fully drawn the first and second tranche of the secured equipment credit facility totaling $1.0 billion and made two
equal regularly scheduled principal repayments (one in the Predecessor 191
- day period ended July 10, 2013 and the other in the Successor year ended December
31, 2013)totaling $111 million during 2013. 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 from Ericsson, Inc. and is fully and unconditionally guaranteed by Sprint Communications, Inc.
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.
Covenants
Certain indentures that govern our outstanding notes also require compliance with various
covenants, including covenants that limit the ability of the Company and its subsidiaries to sell all or substantially all of its assets, and limit the ability of the
Company and its subsidiaries to incur indebtedness and liens, each as defined by the terms of the indentures and supplemental indentures.
As of
December 31, 2013 , the Company was in compliance with all restrictive and financial covenants associated with its borrowings. A default under
any of our borrowings could trigger defaults under certain of our other debt obligations, which in turn could result in the maturities being accelerated.
Under our revolving bank credit facility and other bank agreements, we are currently restricted from paying cash dividends because our ratio of total
indebtedness to adjusted EBITDA (each as defined in the applicable agreement) exceeds
2.5 to 1.0.
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