Cricket Wireless 2010 Annual Report Download - page 124

excluding, the applicable date of purchase, was approximately $996.5 million, which the Company obtained from
the issuance of $1,200 million of unsecured senior notes on November 19, 2010, as discussed below.
On December 20, 2010, the Company completed the redemption of all of the remaining 9.375% senior notes
due 2014 pursuant to the optional redemption provisions of the notes at a price of 104.688% of the principal amount
of outstanding notes, plus accrued and unpaid interest to, but not including, the redemption date. The total cash
payment for the redemption was approximately $195.1 million. In connection with the completion of the
redemption, the indenture governing the notes was satisfied and discharged in accordance with its terms.
As a result of the repurchase and redemption of the notes, the Company recognized a $54.5 million loss on
extinguishment of debt during the year ended December 31, 2010, which was comprised of $46.6 million of tender
offer consideration (including $18.3 million in consent payments), $1.1 million of dealer manager fees, $8.6 million
of redemption premium, $10.7 million of unamortized debt issuance costs and $0.2 million in related professional
fees, net of $12.7 million of unamortized premium.
Unsecured Senior Notes Due 2014
In 2006, Cricket issued $750 million of 9.375% unsecured senior notes due 2014 in a private placement to
institutional buyers, which were exchanged in 2007 for identical notes that had been registered with the Securities
and Exchange Commission (“SEC”). In June 2007, Cricket issued an additional $350 million of 9.375% unsecured
senior notes due 2014 in a private placement to institutional buyers at an issue price of 106% of the principal
amount, which were exchanged in June 2008 for identical notes that had been registered with the SEC. These notes
were all treated as a single class and had identical terms. The $20.1 million premium that the Company received in
connection with the issuance of the second tranche of notes had been recorded in long-term debt in the consolidated
financial statements and was amortized as a reduction to interest expense over the term of the notes. As described
above, in the fourth quarter of 2010, using the proceeds of the issuance of $1,200 million of unsecured senior notes,
the Company repurchased and redeemed all of the outstanding notes.
Convertible Senior Notes Due 2014
In June 2008, Leap issued $250 million of unsecured convertible senior notes due 2014 in a private placement
to institutional buyers. The notes bear interest at the rate of 4.50% per year, payable semi-annually in cash in arrears,
which interest payments commenced in January 2009. The notes are Leap’s general unsecured obligations and rank
equally in right of payment with all of Leap’s existing and future senior unsecured indebtedness and senior in right
of payment to all indebtedness that is contractually subordinated to the notes. The notes are structurally
subordinated to the existing and future claims of Leap’s subsidiaries’ creditors, including under the secured
and unsecured senior notes described above and below. The notes are effectively junior to all of Leap’s existing and
future secured obligations, including those under the senior secured notes described below, to the extent of the value
of the assets securing such obligations.
Holders may convert their notes into shares of Leap common stock at any time on or prior to the third
scheduled trading day prior to the maturity date of the notes, July 15, 2014. If, at the time of conversion, the
applicable stock price of Leap’s common stock is less than or equal to approximately $93.21 per share, the notes
will be convertible into 10.7290 shares of Leap common stock per $1,000 principal amount of the notes (referred to
as the “base conversion rate”), subject to adjustment upon the occurrence of certain events. If, at the time of
conversion, the applicable stock price of Leap common stock exceeds approximately $93.21 per share, the
conversion rate will be determined pursuant to a formula based on the base conversion rate and an incremental share
factor of 8.3150 shares per $1,000 principal amount of the notes, subject to adjustment.
Leap may be required to repurchase all outstanding notes in cash at a repurchase price of 100% of the principal
amount of the notes, plus accrued and unpaid interest, if any, thereon to the repurchase date if (1) any person
acquires beneficial ownership, directly or indirectly, of shares of Leap’s capital stock that would entitle the person to
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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)