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Table of Contents
Index to Consolidated Financial Statements
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — ( CONTINUED)
date of each draw of the Sprint Notes, the BCF will be calculated based on the closing price on settlement date less the exchange price of $1.50 per share
multiplied by the number of shares of Clearwire Class A common stock issued. The amount of the BCF for each draw is limited to the proceeds received for that
draw. The BCF is recognized as a discount to the debt and an increase to Additional paid
- in capital on the consolidated balance sheets. The debt discount will
be accreted from the date of issuance through the stated maturity into Interest expense on the consolidated statements of operations on a straight
- line basis.
See Note 16, Subsequent Events.
At July 9, 2013, we were in compliance with our debt covenants.
Vendor Financing Notes
We have a vendor financing facility, which we refer to as the Vendor Financing Facility, which allows us to obtain financing by entering into notes, which
we refer to as Vendor Financing Notes. The Vendor Financing Notes mature during 2014 and 2015 and the coupon rates are based on 3
- month LIBOR plus a
spread of 5.50% and 7.00% for secured and unsecured notes, respectively.
Capital Lease Obligations
Certain of our network equipment have been acquired under capital lease facilities. At the inception of the capital lease, the lower of either the present
value of the minimum lease payments required by the lease or the fair value of the equipment, is recorded as a capital lease obligation. The initial non
- cancelable
term of these capital leases are three to twelve years and may include one or more renewal options at the end of the initial lease term that may be exercised at our
discretion. Lease payments for the initial lease term and any fixed renewal periods are established at the inception of the lease and interest expense is recognized
using the effective interest rate method based on the rate imputed using the contractual terms of the lease.
Our lease agreements may contain change of control provisions. In certain agreements, a change of control may exclude a change of control by permitted
holders including, but not limited to, Sprint, any of its successors and its respective affiliates. Other agreements may reference circumstances involving a
change of control resulting in Clearwire's credit rating falling below “
Caa1 ” as rated by Moody's Investors Service. Upon the occurrence of a change of control,
the lessor may require payment of a predetermined casualty value of the leased equipment
Future Payments —
For future payments on our long - term debt see Note 12, Commitments and Contingencies.
Interest Expense —
Interest expense included in our consolidated statements of operations for the 190 days ended July 9, 2013 , and the years ended
December 31, 2012 and 2011 , consisted of the following (in thousands):
_______________________________________
F - 74
190 Days Ended July
9,
Year Ended December 31,
2013
2012
2011
Interest coupon(1)
$
275,551
$
518,671
$
484,599
Accretion of debt discount and amortization of debt premium, net(2)
36,832
41,386
40,216
Capitalized interest
(6,751
)
(6,598
)
(18,823
)
Total interest expense
$
305,632
$
553,459
$
505,992
(1)
The year ended December 31, 2012 included $2.5 million of coupon interest relating to the Exchangeable Notes, which was settled in the non- cash Exchange Transaction.
(2)
Includes non-cash amortization of deferred financing fees which are classified as Other assets on the consolidated balance sheets.