AT&T Wireless 2015 Annual Report Download - page 34

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Dollars in millions except per share amounts
32 | AT&T INC.
The Revolving Credit Agreement contains covenants that
are customary for an issuer with an investment grade senior
debt credit rating, as well as a net debt-to-EBITDA (earnings
before interest, taxes, depreciation and amortization, and
other modifications described in the Revolving Credit
Agreement) financial ratio covenant that AT&T will maintain,
as of the last day of each fiscal quarter, a ratio of not
more than 3.5-to-1.
The Syndicated Credit Agreement
In March 2015, AT&T borrowed all amounts available under
the Tranche A Facility and the Tranche B Facility. Amounts
borrowed under the Tranche A Facility will be due on
March2,2018. Amounts borrowed under the TrancheB
Facility will be subject to amortization from March2,2018,
with 25percent of the aggregate principal amount thereof
being payable prior to March2,2020, and all remaining
principal amount due on March2,2020.
Advances bear interest at a rate equal to: (i) the LIBOR
for deposits in dollars (adjusted upwards to reflect any
bank reserve costs) for a period of three or six months,
as applicable, plus (ii) the Applicable Margin (each such
Advance, a Eurodollar Rate Advance). The Applicable Margin
under the Tranche A Facility will equal 1.000%, 1.125%
or 1.250% per annum depending on AT&T’s credit rating.
The Applicable Margin under the Tranche B Facility will
equal 1.125%, 1.250% or 1.375% per annum, depending
on AT&T’s credit rating.
The Syndicated Credit Agreement contains covenants that
are customary for an issuer with an investment grade senior
debt credit rating. Among other things, the Syndicated
Credit Agreement requires us to maintain a net debt-to-
EBITDA (earnings before interest, income taxes, depreciation
and amortization, and other modifications described in
the Syndicated Credit Agreement) ratio of not more
than 3.5-to-1, as of the last day of each fiscal quarter.
Events of default are customary for an agreement of this
nature and result in the acceleration or permit the lenders
to accelerate, as applicable, required payment and which
would increase the Applicable Margin by 2.00% per annum.
The 18-Month Credit Agreement
In March 2015, AT&T borrowed all amounts available under
the 18-Month Credit Agreement. Amounts borrowed under
the 18-Month Credit Agreement will be due and payable
on September2,2016. In September 2015, we partially
repaid the amount borrowed.
Advances bear interest at a rate equal to: (i) the LIBOR
for deposits in dollars (adjusted upwards to reflect any bank
reserve costs) for a period of one, two, three or six months,
as applicable, plus (ii) the Applicable Margin (each such
Advance, a Eurodollar Rate Advance). The Applicable Margin
will equal 0.800%, 0.900% or 1.000% per annum, depending
Revolving Credit Agreement
In the event advances are made under the Revolving
Credit Agreement, those advances would be used for
general corporate purposes. 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 the
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. We also may request that the total amount
of the lender’s commitments be increased by an integral
multiple of $25 effective on a date that is at least 90days
prior to the scheduled termination date then in effect,
provided that no event of default has occurred and in
no event shall the total amount of the lender’s commitments
at any time exceed $14,000. At December31,2015,
we had no advances outstanding under the Revolving Credit
Agreement and we have complied will all covenants.
The obligations of the lenders to provide advances will
terminate on December11,2020, unless prior to that
date either: (i) AT&T reduces to $0 the commitments
of the lenders, or (ii) certain events of default occur.
We and lenders representing more than 50% of the facility
amount may agree to extend their commitments for two
one-year periods beyond the December11,2020,
termination date, under certain circumstances.
Advances under the Revolving Credit Agreement would bear
interest, at AT&T’s option, either:
• at a variable annual rate equal to (1) the highest of:
(a)the base 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 LIBOR applicable to U.S. dollars
for a period of one month plus 1.00% per annum,
plus (2) an applicable margin, as set forth in the
Revolving Credit Agreement (“Applicable Margin
for Base Advances”); or
• at a rate equal to: (i) LIBOR for a period of one,
two, three or six months, as applicable, plus (ii) the
Applicable Margin (“Applicable Margin for Eurocurrency
Rate Advances”).
The Applicable Margin for Eurocurrency Rate Advances
will equal 0.680%, 0.910%, 1.025%, or 1.125% per annum,
depending on AT&T’s credit rating. The Applicable Margin
for Base Rate Advances will be equal to the greater of
0.00% and the relevant Applicable Margin for Eurocurrency
Rate Advances minus 1.00% per annum depending on
AT&T’scredit rating.
We will pay a facility fee of 0.070%, 0.090%, 0.100%
or 0.125% per annum, depending on AT&T’s credit rating,
of the amount of lender commitments.