Cricket Wireless 2011 Annual Report Download - page 130

LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The notes and the guarantees are effectively junior to all of Leap’s, Cricket’s and the guarantors’ obligations
under any permitted priority debt that may be incurred in the future (up to the lesser of 0.30 times Leap’s
consolidated cash flow (excluding the consolidated cash flow of Savary Island, STX Wireless and Cricket Music)
for the prior four fiscal quarters and $300 million in aggregate principal amount outstanding), to the extent of the
value of the collateral securing such permitted priority debt, as well as to existing and future liabilities of Leap’s
and Cricket’s subsidiaries that are not guarantors (including STX Wireless and Cricket Music) and Savary Island
and their respective subsidiaries. In addition, the notes and the guarantees are senior in right of payment to any of
Leap’s, Cricket’s and the guarantors’ future subordinated indebtedness.
The notes and the guarantees are secured on a first-priority basis, equally and ratably with any future parity
lien debt, by liens on substantially all of the present and future personal property of Leap, Cricket and the
guarantors, except for certain excluded assets and subject to permitted liens (including liens on the collateral
securing any future permitted priority debt).
Prior to May 15, 2012, Cricket may redeem up to 35% of the aggregate principal amount of the notes at a
redemption price of 107.750% of the principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date, from the net cash proceeds of specified equity offerings. Prior to May 15, 2012, Cricket may
redeem the notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus
the applicable premium and any accrued and unpaid interest thereon to the redemption date. The applicable
premium is calculated as the greater of (i) 1.0% of the principal amount of such notes and (ii) the excess of
(a) the present value at such date of redemption of (1) the redemption price of such notes at May 15, 2012 plus
(2) all remaining required interest payments due on such notes through May 15, 2012 (excluding accrued but
unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate plus
50 basis points, over (b) the principal amount of such notes. The notes may be redeemed, in whole or in part, at
any time on or after May 15, 2012, at a redemption price of 105.813%, 103.875% and 101.938% of the principal
amount thereof if redeemed during the twelve months beginning on May 15, 2012, 2013 and 2014, respectively,
or at 100% of the principal amount if redeemed during the twelve months beginning on May 15, 2015 or
thereafter, plus accrued and unpaid interest thereon to the redemption date.
If a “change of control” occurs (which includes the acquisition of beneficial ownership of 35% or more of
Leap’s equity securities (other than a transaction where immediately after such transaction Leap will be a wholly-
owned subsidiary of a person of which no person or group is the beneficial owner of 35% or more of such
person’s voting stock), a sale of all or substantially all of the assets of Leap and its restricted subsidiaries and a
change in a majority of the members of Leap’s board of directors that is not approved by the board), each holder
of the notes may require Cricket to repurchase all of such holder’s notes at a purchase price equal to 101% of the
principal amount of the notes, plus accrued and unpaid interest thereon to the repurchase date.
Unsecured Senior Notes Due 2020
In November 2010, Cricket issued $1,200 million of 7.75% unsecured senior notes due 2020 in a private
placement to institutional buyers at an issue price of 98.323% of the principal amount, which were exchanged in
January 2011 for identical notes that had been registered with the SEC. The $20.1 million discount to the net
proceeds the Company received in connection with the issuance of the notes has been recorded in long-term debt
in the consolidated financial statements and is being accreted as an increase to interest expense over the term of
the notes. In May 2011, Cricket issued an additional $400 million of 7.75% unsecured senior notes due 2020 in a
private placement to institutional buyers at an issue price of 99.193% of the principal amount, which were
exchanged in November 2011 for identical notes that had been registered with the SEC. The $3.2 million
discount to the net proceeds the Company received in connection with the issuance of the additional notes was
recorded in long-term debt in the consolidated financial statements and is being accreted as an increase to interest
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