Sprint - Nextel 2014 Annual Report Download - page 57

Table of Contents
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recorded at its estimated fair value of $1.2 billion in "Prepaid expenses and other current assets" on the consolidated balance
sheet. The fair value of the Receivable due to Sprint was estimated using a discounted cash flow model, which relied
principally on unobservable inputs such as the nature of the sold Receivables and subscriber payment history. Changes in the
fair value of the receivable due to Sprint are included in operating (loss) income on the consolidated statements of operations.
As of March 31, 2015, there was approximately $460 million of available funding under the Receivables Facility. In April
2015, Sprint elected to remit payments received to the Conduits to reduce the funded amount to zero.
Each SPE’s sole business consists of the purchase or acceptance through capital contributions of the Receivables
from the Originators and the subsequent retransfer of, or granting of a security interest in, such Receivables to the bank agent
under the Receivables Facility. In addition, each SPE is a separate legal entity with its own separate creditors who will be
entitled, prior to and upon the liquidation of the SPE, to be satisfied out of the SPE’s assets prior to any assets or value in the
SPE becoming available to the Originators or Sprint. Accordingly, the assets of the SPE, including the $1.7 billion of
installment receivables contributed by the Originators and held by the SPEs and the $1.3 billion receivable due to Sprint from
the Conduits as of March 31, 2015, are not available to pay creditors of Sprint or any of its affiliates (other than any other
SPE), although collections from these receivables in excess of amounts required to pay the investment, yield and fees of the
Conduits and other creditors of the SPEs may be remitted to the Originators and Sprint during and after the term of the
Receivables Facility.
Long-Term Debt and Scheduled Maturities
We retired the remaining $181 million aggregate principal amount of the iPCS, Inc. Second Lien Secured Floating
Rate Notes in May 2014. In addition, we made principal payments of $282 million on our secured equipment credit facilities
during the year ended March 31, 2015. As part of the amendment to the EDC agreement in December 2014, we borrowed an
additional tranche totaling $300 million, as described below. On February 24, 2015, we issued $1.5 billion aggregate principal
amount of 7.625% notes due 2025.
Credit Facilities
In October 2014, we amended our revolving bank credit facility that expires in February 2018 to, among other
things, modify the required ratio (Leverage Ratio) of total indebtedness to trailing four quarters earnings before interest,
taxes, depreciation and amortization and other non-recurring items, as defined by the revolving bank credit facility (adjusted
EBITDA), to provide that it may not exceed 6.5 to 1.0 through the quarter ending December 31, 2015, 6.25 to 1.0 through the
quarter ending December 31, 2016 and 6.0 to 1.0 each fiscal quarter ending thereafter through expiration of the facility. The
amended facility allows us to reduce our total indebtedness for purposes of calculating the Leverage Ratio by subtracting
from total indebtedness the amount of any cash contributed into a segregated reserve account, provided that, after such cash
contribution, our cash remaining on hand for operations exceeds $2.0 billion. Upon transfer, the cash contribution will remain
restricted until and to the extent it is no longer required for the Leverage Ratio to remain in compliance. The amendment also
added Sprint Corporation as a guarantor of the revolving bank credit facility.
In December 2014, we amended our unsecured EDC agreement and the Eksportkreditnamnden (EKN) secured
equipment credit facility to modify the Leverage Ratio to provide for terms similar to those of the revolving bank credit
facility, as was amended in October 2014, and to add Sprint Corporation as guarantor under each of the respective
agreements. As part of the amendment to the EDC agreement, we increased our borrowing capacity by an additional $300
million. As of March 31, 2015, the EDC agreement was fully drawn. Under the terms of both the EDC agreement and the
EKN secured equipment credit facility, repayments of outstanding amounts cannot be re-drawn.
Finnvera secured equipment credit facility
In December 2014, we and certain of our subsidiaries entered into a secured equipment credit facility insured by
Finnvera plc (Finnvera), the Finnish export credit agency, with the ability to borrow up to $800 million, to finance network
equipment-related purchases from Nokia Solutions and Networks US LLC, USA. The facility is divided into three
consecutive tranches of varying size, with borrowings available through October 2017, contingent upon the amount of
equipment-related purchases made by Sprint. Interest and fully-amortizing principal payments are due semi-annually by
tranche beginning in March 2015 until June 2021. As of March 31, 2015, we had drawn $72 million on the facility. We made
principal repayments totaling $28 million during the year ended March 31, 2015 and the balance outstanding at March 31,
2015 was $44 million. In April 2015, we drew an additional $154 million on this credit facility.
K-sure secured equipment credit facility
In December 2014, we and certain of our subsidiaries entered into a secured equipment credit facility insured by
K-sure, the Korean export credit agency, with the ability to borrow up to $750 million, to finance network equipment-related