Cricket Wireless 2011 Annual Report Download - page 38

If new indebtedness is added to our current levels of indebtedness, the related risks that we now face could
intensify. In addition, depending on the timing and extent of any additional indebtedness that we could incur and
our then-current consolidated leverage ratio, such additional amounts could potentially result in the issuance of
adverse credit ratings affecting us and/or our outstanding indebtedness. For example, following the issuance of
$400 million of additional 7.75% senior notes due 2020 in May 2011, our unsecured debt was downgraded by
one credit rating agency, although we did not experience any changes to our overall credit rating. Any future
adverse credit ratings could make it more difficult or expensive for us to borrow in the future and could affect the
trading prices of our secured and unsecured senior notes, our convertible senior notes and our common stock.
To Service Our Indebtedness and Fund Our Working Capital and Capital Expenditures, We Will Require
a Significant Amount of Cash. Our Ability to Generate Cash Depends on Many Factors Beyond Our
Control.
Our ability to make payments on our indebtedness will depend upon our future operating performance and
on our ability to generate cash flow in the future, which are subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will
generate sufficient cash flow from operations, or that future financing will be available to us, in an amount
sufficient to enable us to repay or service our indebtedness or to fund our other liquidity needs or at all. If the
cash flow from our operating activities is insufficient for these purposes, we may take actions, such as delaying
or reducing capital expenditures, attempting to restructure or refinance our indebtedness prior to maturity, selling
assets or operations or seeking additional equity capital. Any or all of these actions may be insufficient to allow
us to service our debt obligations. Further, we may be unable to take any of these actions on commercially
reasonable terms, or at all.
We May Be Unable to Refinance Our Indebtedness.
We may need to refinance all or a portion of our indebtedness before maturity, including indebtedness under
the indentures governing our secured and unsecured senior notes and convertible senior notes. Our $250 million
of 4.50% unsecured convertible senior notes is due in 2014, our $300 million of 10.0% unsecured senior notes is
due in 2015, our $1,100 million of 7.75% senior secured notes is due in 2016, and our $1,600 million of 7.75%
unsecured senior notes is due in 2020. There can be no assurance that we will be able to obtain sufficient funds to
enable us to repay or refinance any of our indebtedness on commercially reasonable terms or at all.
Covenants in Our Indentures or in Credit Agreements or Indentures That We May Enter into in the
Future May Limit Our Ability to Operate Our Business.
The indentures governing Cricket’s secured and unsecured senior notes contain covenants that restrict the
ability of Leap, Cricket and their restricted subsidiaries to make distributions or other payments to our investors
or subordinated creditors unless we satisfy certain financial tests or other criteria. In addition, these indentures
include covenants restricting, among other things, the ability of Leap, Cricket and their restricted subsidiaries to:
• incur additional indebtedness;
• create liens or other encumbrances;
• place limitations on distributions from restricted subsidiaries;
• pay dividends, make investments, prepay subordinated indebtedness or make other restricted payments;
• issue or sell capital stock of restricted subsidiaries;
• issue guarantees;
• sell or otherwise dispose of all or substantially all of our assets;
• enter into transactions with affiliates; and
• make acquisitions or merge or consolidate with another entity.
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