Cricket Wireless 2012 Annual Report Download - page 124

LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Credit Agreement
On October 10, 2012, Cricket entered into a credit agreement (the “Credit Agreement”) with respect to a
$400 million senior secured term loan facility, which was fully drawn at closing and matures in October 2019.
Outstanding borrowings under the Credit Agreement bear interest at the London Interbank Offered Rate
(“LIBOR”) plus 3.50% (subject to a LIBOR floor of 1.25% per annum) or at the bank base rate plus 2.50%
(subject to a base rate floor of 2.25% per annum), as selected by Cricket. At December 31, 2012, the weighted
average effective interest rate on outstanding borrowings under the Credit Agreement was 4.80%. Borrowings
under the Credit Agreement must be repaid in 27 quarterly installments of $1.0 million each, commencing on
March 31, 2013, followed by a final installment of $373.0 million at maturity. Net proceeds from the term loan
facility were used to redeem all of Cricket’s $300 million in aggregate principal amount of outstanding 10.0%
unsecured senior notes due 2015 and other general corporate purposes.
Borrowings under the Credit Agreement are guaranteed by Leap and each of its existing and future wholly
owned domestic subsidiaries (other than Cricket, which is the borrower) that guarantees any indebtedness of
Leap, Cricket or any subsidiary guarantor or that constitutes a “significant subsidiary” as defined in Regulation
S-X under the Securities Act of 1933, as amended (subject to certain exceptions).
Borrowings under the Credit Agreement are effectively senior to all of Leap’s, Cricket’s and the guarantors’
existing and future unsecured indebtedness (including Cricket’s $1,600 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
obligations under the Credit Agreement.
Borrowings under the Credit Agreement are secured on a first-priority basis, equally and ratably with
Cricket’s 7.75% senior secured notes due 2016 and 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). Under the
Credit Agreement, Leap, Cricket and the guarantors are permitted to incur liens securing indebtedness for
borrowed money in an aggregate principal amount outstanding (including the aggregate principal amount
outstanding of the 7.75% senior secured notes due 2016) of up to the greater of $1,750 million and 3.5 times
Leap’s consolidated cash flow (excluding the consolidated cash flow of Cricket Music Holdco, LLC (“Cricket
Music”) (a wholly-owned subsidiary of Cricket that holds certain hardware, software and intellectual property
relating to Cricket’s Muve Music®service)) for the prior four fiscal quarters.
Borrowings under the Credit Agreement 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 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 their respective
subsidiaries). In addition, borrowings under the Credit Agreement are senior in right of payment to any of
Leap’s, Cricket’s and the guarantors’ future subordinated indebtedness.
Cricket has the right to prepay borrowings under the Credit Agreement, in whole or in part, at any time
without premium or penalty, except that prepayments in connection with a repricing transaction occurring on or
prior to October 10, 2013 are subject to a prepayment premium of 1.00% of the principal amount of the
borrowings so prepaid.
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