Cricket Wireless 2010 Annual Report Download - page 83

Senior Notes
Discharge of Indenture and Loss on Extinguishment of Debt
On November 4, 2010, we launched a tender offer to purchase for cash any and all of our $1,100 million in
aggregate principal amount of outstanding 9.375% senior notes due 2014. Concurrently with the tender offer, we
also solicited consents from the holders of the notes to eliminate certain covenants in and amend certain provisions
of the indenture governing the notes. We accepted tenders on November 19, 2010 and December 6, 2010 for
approximately $915.8 million in aggregate principal amount of the notes in connection with the tender offer. The
holders of the accepted notes received total consideration of $1,050.63 per $1,000 principal amount of notes
tendered prior to the early settlement date, which included a $20 consent payment per $1,000 principal amount of
notes tendered, and $1,030.63 per $1,000 principal amount of notes tendered thereafter. The total cash payment to
purchase the tendered notes, including accrued and unpaid interest up to, but excluding, the applicable date of
purchase, was approximately $996.5 million, which we obtained from the issuance of $1,200 million of unsecured
senior notes on November 19, 2010, as discussed below.
On December 20, 2010, we 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, we 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 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 we 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, we 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 common stock is less than or equal to approximately $93.21 per share, the notes will
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