Sprint - Nextel 2015 Annual Report Download - page 117

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Finnveraplc(Finnvera)
The Finnvera secured equipment credit facility provides us with the ability to borrow up to $800 million to finance network-related purchases from
Nokia Solutions and Networks US LLC, USA. The facility, which initially could be drawn upon as many as three consecutive tranches, now has one tranche
remaining and available for borrowing through October 2017. Such borrowings are contingent upon the amount and timing of Sprint's network-related purchases.
During the year ended March 31, 2016 , we drew $208 million on the facility, and we made principal repayments totaling $56 million , resulting in a total principal
amount of $196 million outstanding at March 31, 2016 .
K-sure
The K-sure equipment credit facility provides for the ability to borrow up to $750 million to finance network-related purchases from Samsung
Telecommunications America, LLC. The facility can be divided in up to three consecutive tranches of varying size with borrowings available until May 2018,
contingent upon the amount of network-related purchases made by Sprint. During the year ended March 31, 2016 , we drew $266 million on the facility, resulting
in a total principal amount of $323 million outstanding at March 31, 2016 .
Delcredere| Ducroire(D/D)
The D/D secured equipment credit facility provides for the ability to borrow up to $250 million , to finance network equipment-related purchases from
Alcatel-Lucent USA Inc. During the year ended March 31, 2016 , we drew $32 million on the facility resulting in a total principal amount of $32 million
outstanding at March 31, 2016 .
Borrowings under the EKN, Finnvera, K-sure and D/D secured equipment credit facilities are each secured by liens on the respective equipment
purchased pursuant to each facility's credit agreement. In addition, repayments of outstanding amounts borrowed under the secured equipment credit facilities
cannot be redrawn. Each of these facilities is fully and unconditionally guaranteed by both Sprint Communications, Inc. and Sprint Corporation. The covenants
under each of the four secured equipment credit facilities are similar to one another and to the covenants of our revolving bank credit facility and EDC agreement.
Financing, Capital Lease and Other Obligations
We have approximately 3,000 cell sites that we sold and subsequently leased back during 2008. 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, net on our consolidated balance sheets 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.
In February and March 2016, we sold approximately $1.2 billion in total of future amounts due from customers who lease certain devices from us in
exchange for cash proceeds of $600 million through our Accounts Receivable Facility ( seeNote4.FundingSources). The difference between the amount sold
and the cash received represents additional collateral to the lender. The sale was accounted for as a financing and the $600 million cash proceeds were,
accordingly, reflected as debt in our consolidated balance sheets. The associated leased devices continue to be reported as part of our property, plant and
equipment, net on our consolidated balance sheets and continue to be depreciated over their estimated useful life.
Covenants
Certain indentures and other agreements 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, limit the ability of the Company and its subsidiaries to incur indebtedness and liens, and require that we
maintain certain financial ratios, each as defined by the terms of the indentures, supplemental indentures and financing arrangements.
As of March 31, 2016 , 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 certain other agreements, we are currently restricted from paying cash dividends because our ratio of total
indebtedness to adjusted EBITDA (each as defined in the applicable agreements) exceeds 2.5 to 1.0 .
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