AT&T Wireless 2011 Annual Report Download - page 73

AT&T Inc. 71
The obligations of the lenders under the Four-Year Agreement
to provide advances will terminate on December 19, 2015,
unless prior to that date either: (i) AT&T and, if applicable,
a Co-Borrower, reduces to $0 the commitments of the
lenders under the Agreement or (ii) certain events of default
occur. The Agreement also provides that AT&T and lenders
representing more than 50% of the facility amount may agree
to extend their commitments under the Agreement for an
additional one year beyond the December 19, 2015,
termination date, under certain circumstances. We also can
request the lenders to further increase their commitments
(i.e., raise the available credit) up to an additional $2,000
provided no event of default has occurred.
Advances would bear interest, at AT&T’s option, either:
 •atavariableannualrateequaltothehighestof:
(1)(a) the base (or prime) rate of the bank affiliate of
Citibank, N.A. which is serving as administrative agent
under the Agreement, (b) 0.50% per annum above the
Federal funds rate, and (c) the London interbank offered
rate (LIBOR) applicable to U.S. Dollars for a period of
one month plus 1.00%, plus (2) an applicable margin,
as set forth in the Agreement (Applicable Margin); or
 •atarateequalto:(i)theLIBORforaperiodofone,
two, three or six months, as applicable, plus (ii) the
Applicable Margin.
The Applicable Margin will equal 0.560% if our unsecured
long-term debt is rated at least A+ by Standard & Poor’s or
Fitch, Inc. or A1 by Moody’s Investors Service. The Applicable
Margin will be 0.670% per annum if our unsecured long-term
debt ratings are A or A2 and will be 0.900% per annum in the
event our unsecured long-term debt ratings are A- and A3
(or below).
The Agreement continues to require us to maintain a debt-to-
EBITDA (earnings before interest, income taxes, depreciation
and amortization, and other modifications described in the
Agreement) ratio of not more than 3-to-1, as of the last day
of each fiscal quarter, for the four quarters then ended.
Defaults under the Agreement, which would permit the
lenders to accelerate required repayment and which would
increase the Applicable Margin by 2.00% per annum, include:
 •Wefailtopayprincipalorinterest,orotheramounts
under the Agreement beyond any grace period.
 •Wefailtopaywhendueotherdebtof$400ormorethat
results in acceleration of that debt (commonly referred
to as cross-acceleration) or a creditor commences
enforcement proceedings within a specified period after
a money judgment of $400 or more has become final.
 •Apersonacquiresbeneficialownershipofmorethan50%
of AT&T common shares or more than a majority of
AT&T’s directors change in any 24-month period other
than as elected by the remaining directors (commonly
referred to as a change in control).
As of December 31, 2011 and 2010, we were in compliance
with all covenants and conditions of instruments governing
our debt. Substantially all of our outstanding long-term debt
is unsecured. Maturities of outstanding long-term notes and
debentures, as of December 31, 2011, and the corresponding
weighted-average interest rate scheduled for repayment are
as follows:
There-
2012 2013 2014 2015 2016 after
Debt
repayments1,2 $3,453 $5,824 $4,788 $4,514 $4,923 $41,111
Weighted-
average
interest rate 5.0% 5.6% 5.1% 4.3% 3.7% 6.2%
1 Debt repayments assume putable debt is redeemed by the holders at the next
opportunity.
2 Long-term debt obligations and interest payments on long-term debt were not
adjusted to reflect the January 13, 2012, notice to call $1,200 of debt, which was
completed on February 15, 2012, with an original maturity of February 15, 2056.
Credit Facilities
T-Mobile Acquisition Financing In December 2011, we
and Deutsche Telekom agreed to terminate our agreement
to purchase T-Mobile. The termination of the purchase
agreement also terminated our $20,000 associated credit
agreement with a group of banks, dated as of March 31, 2011,
to partially fund the purchase.
Other Credit Facilities In December 2011, we amended and
extended for an additional one-year term our existing $5,000,
four-year revolving credit agreement (Four-Year Agreement)
with a syndicate of banks. We also entered into a new $5,000,
364-day revolving credit agreement, with a syndicate of
banks, to replace our expiring 364-day revolving credit
agreement. In the event advances are made under either
agreement, those advances would be used for general
corporate purposes, which could include repayment of
maturing commercial paper. Advances are not conditioned
on the absence of a material adverse change. All advances
must be repaid no later than the date on which lenders are
no longer obligated to make any advances under each
agreement. Under each agreement, we can terminate, in
whole or in part, amounts committed by the lenders in excess
of any outstanding advances; however, we cannot reinstate
any such terminated commitments. At December 31, 2011,
we had no advances outstanding under either agreement and
were in compliance with all covenants under each agreement.
In January 2012, we provided notice to permanently reduce
the outstanding commitments of the lenders under our
364-day revolving credit agreement from $5,000 to $3,000.
The Four-Year Agreement
The amendments to the Four-Year Agreement include, but
are not limited to, (i) changing the interest rate charged for
advances from a rate based on AT&T’s credit default swap
spread to a fixed spread; (ii) decreasing the amount payable
as facilities fees, and (iii) at AT&T’s option, adding subsidiaries
as additional borrowers, with or without a guarantee provided
by AT&T Inc., subject to conditions provided in the agreement.
The terms of such guarantee are set forth in the agreement.