Cricket Wireless 2011 Annual Report Download - page 87

Senior Secured Notes Due 2016
In June 2009, Cricket issued $1,100 million of 7.75% senior secured notes due 2016 in a private placement
to institutional buyers at an issue price of 96.134% of the principal amount, which notes were exchanged in
December 2009 for identical notes that had been registered with the SEC. The $42.5 million discount to the net
proceeds we 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. At December 31, 2011, the effective interest rate on the notes was 7.96%, which includes the effect of the
discount accretion.
The notes bear interest at the rate of 7.75% per year, payable semi-annually in cash in arrears, which interest
payments commenced in November 2009. The notes are guaranteed on a senior secured basis by Leap and each
of its existing and future domestic subsidiaries (other than Cricket, which is the issuer of the notes) that
guarantees any indebtedness of Leap, Cricket or any subsidiary guarantor. The notes and the guarantees are
Leap’s, Cricket’s and the guarantors’ senior secured obligations and are equal in right of payment with all of
Leap’s, Cricket’s and the guarantors’ existing and future unsubordinated indebtedness.
The notes and the guarantees are effectively senior to all of Leap’s, Cricket’s and the guarantors’ existing
and future unsecured indebtedness (including Cricket’s $1,900 million aggregate principal amount of unsecured
senior notes and, in the case of Leap, Leap’s $250 million aggregate principal amount of convertible senior
notes), as well as to all of Leap’s, Cricket’s and the guarantors’ obligations under any permitted junior lien debt
that may be incurred in the future, in each case to the extent of the value of the collateral securing the senior
secured notes and the guarantees.
The notes and the guarantees are secured on a pari passu basis with all of Leap’s, Cricket’s and the
guarantors’ obligations under any permitted parity lien debt that may be incurred in the future. Leap, Cricket and
the guarantors are permitted to incur debt under existing and future secured credit facilities in an aggregate
principal amount outstanding (including the aggregate principal amount outstanding of the senior secured notes)
of up to the greater of $1,500 million and 2.5 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.
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 107.75% 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
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