Cricket Wireless 2011 Annual Report Download - page 88

(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.
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.
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 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. 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 we 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 expense
over the term of the notes. At December 31, 2011, the effective interest rate on the initial $1,200 million tranche
and the additional $400 million tranche of the notes was 7.87% and 7.81%, respectively, both of which include
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 April 2011. The notes are guaranteed on an unsecured senior basis by Leap and each of
its existing and future domestic subsidiaries (other than Cricket, which is the issuer of the notes) that guarantees
indebtedness of Leap, Cricket or any subsidiary guarantor. The notes and the guarantees are Leap’s, Cricket’s
and the guarantors’ general senior unsecured obligations and rank equally in right of payment with all of Leap’s,
Cricket’s and the guarantors’ existing and future unsubordinated unsecured indebtedness. The notes and the
guarantees are effectively junior to Leap’s, Cricket’s and the guarantors’ existing and future secured obligations,
including those under the senior secured notes described above, to the extent of the value of the assets securing
such obligations, 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.
Prior to October 15, 2013, 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
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