Cricket Wireless 2011 Annual Report Download - page 94

Savary Island as a component of redeemable non-controlling interest in the consolidated balance sheets. Savary
Island has guaranteed Cricket’s put obligations under the Savary Island LLC Agreement, which guaranty is
secured on a first-lien basis by certain assets of Savary Island. Under the Savary Island LLC Agreement, Savary
Island is also required to make monthly mandatory distributions to Ring Island. Savary Island is also party to a
management services agreement with Cricket, pursuant to which Cricket provides management services to
Savary Island in exchange for a management fee.
We attribute profits and losses to Ring Island’s redeemable non-controlling interest each reporting period.
To the extent that the redemption price for Ring Island’s controlling membership interest exceeds the value of
Ring Island’s net interest in Savary Island at any period (after the attribution of profits or losses), the value of
such interest is accreted to the redemption price for such interest with a corresponding adjustment to additional
paid-in capital. However, we would not reduce the carrying amount of the redeemable non-controlling interest
below the redemption price. Both the attribution of profit or loss and the accretion of the redeemable
non-controlling interest are presented in accretion of redeemable non-controlling interests and distributions, net
of tax, in our consolidated statements of operations. As of December 31, 2011 and December 31, 2010, this
redeemable non-controlling interest had a carrying value of $5.3 million.
At the closing of the formation of the venture, Savary Island assumed $211.6 million of the outstanding
loans then owed by Denali and its subsidiaries to Cricket. In connection with Savary Island’s assumption of such
loans, Cricket, Savary Island and Savary Island’s subsidiaries entered into an amended and restated senior
secured credit agreement, or the Savary Island Credit Agreement to amend and restate the terms of the Denali
senior secured credit agreement applicable to the assumed loans. Under the Savary Island Credit Agreement,
Cricket also agreed to loan Savary Island up to an additional $5.0 million to fund its working capital needs. In
connection with the closing of the license exchange transaction with T-Mobile and its affiliates on November 30,
2011 (see above “-Other Transactions”), Savary Island assigned 10 MHz of unused wireless spectrum in
Indianapolis, IN and Minneapolis, MN to T-Mobile and its affiliates and Cricket canceled $41.1 million in
principal amount of indebtedness owed by Savary Island under the Savary Island Credit Agreement. As of
December 31, 2011 and December 31, 2010, borrowings outstanding under the Savary Island Credit Agreement
(excluding accrued interest) totaled $170.5 million and $211.6 million, respectively. Loans under the Savary
Island Credit Agreement (including the assumed loans) accrue interest at the rate of 9.5% per annum and such
interest is added to principal annually. All outstanding principal and accrued interest is due in May 2021.
Outstanding principal and accrued interest are due in quarterly installments commencing May 2018. However, if
Ring Island exercises its put under the Savary Island LLC Agreement prior to such date, then the amortization
commencement date under the Savary Island Credit Agreement will be the later of the amortization
commencement date and the put closing date. Savary Island may prepay loans under the Savary Island Credit
Agreement at any time without premium or penalty. The obligations of Savary Island and its subsidiaries under
the Savary Island Credit Agreement are secured by all of the personal property, fixtures and owned real property
of Savary Island and its subsidiaries, subject to certain permitted liens. The Savary Island Credit Agreement and
the related security agreements contain customary representations, warranties, covenants and conditions.
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