Cricket Wireless 2011 Annual Report Download - page 125

LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
working capital needs. In connection with the closing of the license exchange transaction with T-Mobile and its
affiliates on November 30, 2011 (see “-Other Transactions” above), Savary Island assigned 10 MHz of unused
wireless spectrum in Indianapolis, IN and Minneapolis, MN to T-Mobile and its affiliates and Cricket canceled
$41.1 million in principal amount of indebtedness owed by Savary Island under the Savary Island Credit
Agreement. As of December 31, 2011 and December 31, 2010, borrowings outstanding under the Savary Island
Credit Agreement (excluding accrued interest) totaled $170.5 million and $211.6 million, respectively. Loans
under the Savary Island Credit Agreement (including the assumed loans) accrue interest at the rate of 9.5% per
annum and such interest is added to principal annually. All outstanding principal and accrued interest is due in
May 2021. Outstanding principal and accrued interest are due in quarterly installments commencing May 2018.
However, if Ring Island exercises its put under the Savary Island LLC Agreement prior to such date, then the
amortization commencement date under the Savary Island Credit Agreement will be the later of the amortization
commencement date and the put closing date. Savary Island may prepay loans under the Savary Island Credit
Agreement at any time without premium or penalty. The obligations of Savary Island and its subsidiaries under
the Savary Island Credit Agreement are secured by all of the personal property, fixtures and owned real property
of Savary Island and its subsidiaries, subject to certain permitted liens. The Savary Island Credit Agreement and
the related security agreements contain customary representations, warranties, covenants and conditions.
Note 7. Arrangements with Variable Interest Entities and Joint Ventures
As described in Note 2, the Company consolidates its non-controlling membership interest in Savary Island
in accordance with the authoritative guidance for the consolidation of variable interest entities because Savary
Island is a variable interest entity and, among other things, the Company has entered into an agreement with
Savary Island’s other member which establishes a specified purchase price in the event that Ring Island exercises
its right to sell its membership interest to the Company. Also, as described in Note 2, the Company consolidates
its controlling membership interest in STX Wireless in accordance with the authoritative guidance for
consolidations based on the voting interest model. All intercompany accounts and transactions have been
eliminated in the consolidated financial statements.
The aggregate carrying amount and classification of the assets and liabilities of Savary Island, excluding
intercompany accounts and transactions, as of December 31, 2011 and December 31, 2010 are presented in the
table below (in thousands):
December 31,
2011
December 31,
2010
Assets
Cash and cash equivalents ................................... $ 7,084 $ 5,250
Wireless licenses .......................................... 41,947 156,055
Assets held for sale(1) ...................................... 85,190 —
Total Assets ................................................ $134,221 $161,305
Liabilities
Other current liabilities ..................................... $ 5 $ —
Total Liabilities ............................................. $ 5 $ —
(1) Represents the carrying value of wireless licenses to be sold to Verizon Wireless at the closing under the
license purchase agreement discussed in Note 6.
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