Cricket Wireless 2011 Annual Report Download - page 86

Prior to July 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 July 15, 2012 plus (2) all remaining required interest payments due on such notes through July 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 July 15, 2012, at a redemption price of 105.0% and 102.5% of the
principal amount thereof if redeemed during the twelve months beginning on July 15, 2012 and 2013,
respectively, or at 100% of the principal amount if redeemed during the twelve months beginning on July 15,
2014 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, 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.
The indenture governing the notes limits, among other things, our ability to: incur additional debt; 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 assets; enter into transactions with our affiliates; and make
acquisitions or merge or consolidate with another entity.
Non-Negotiable Promissory Note Due 2015
Cricket service was previously offered in greater Chicago and Southern Wisconsin by Denali, an entity in
which Cricket owned an 82.5% non-controlling membership interest. In December 2010, Cricket purchased the
remaining 17.5% controlling membership interest in Denali that it did not previously own. As part of the
purchase price, Cricket issued a five-year $45.5 million non-negotiable promissory note in favor of the former
holder of such controlling membership interest, which matures on December 27, 2015. Interest on the
outstanding principal balance of the note varies from year to year at rates ranging from approximately 5.0% to
8.3% and compounds annually. Under the note, Cricket is required to make principal payments of $8.5 million
per year, with the remaining principal balance and all accrued interest payable at maturity. Cricket’s obligations
under the note are secured on a first-lien basis by certain assets of Savary Island. On May 4, 2011, Cricket
prepaid approximately $15.1 million in principal amount of the note. As of December 31, 2011 and
December 31, 2010, $21.9 million and $45.5 million in principal amount of indebtedness was outstanding under
the note, respectively.
On November 3, 2011, Savary Island entered into a license purchase agreement with Verizon Wireless, as
further discussed below in “-Capital Expenditures, Significant Acquisitions and Other Transactions,” in which
Savary Island has agreed to sell AWS spectrum in various markets to Verizon Wireless for $172 million. Certain
of the spectrum Savary Island has agreed to sell to Verizon Wireless is secured by a lien in favor of the holder of
the non-negotiable promissory note. Accordingly, in connection with the closing of the Verizon Wireless
transaction, we expect to repay the balance of the non-negotiable promissory note in full. The closing of the
Verizon Wireless transaction is subject to customary closing conditions, including the consent of the FCC. As we
expect that the closing of the Verizon Wireless transaction will occur within a year, we have classified the entire
balance of the non-negotiable promissory note as current maturities of long-term debt on our consolidated
balance sheet as of December 31, 2011.
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