Cricket Wireless 2012 Annual Report Download - page 128

LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
exchanged in November 2011 for identical notes that had been registered with the SEC. The $3.2 million
discount to the net proceeds the Company received in connection with the issuance of the additional notes was
recorded in long-term debt, net in the consolidated financial statements and is being accreted as an increase to
interest expense over the term of the notes. At December 31, 2012, the effective interest rates on the initial
$1,200 million tranche and the additional $400 million tranche of the notes were 7.86% 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 Credit Agreement and the senior secured notes due 2016, 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 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, if any, thereon
to the redemption date, from the net cash proceeds of specified equity offerings. Prior to October 15, 2015,
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, if any, 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 October 15,
2015 plus (2) all remaining required interest payments due on such notes through October 15, 2015 (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 October 15, 2015, at a redemption price of 103.875%, 102.583% and 101.292% of the
principal amount thereof if redeemed during the twelve months beginning on October 15, 2015, 2016 and 2017,
respectively, or at 100% of the principal amount if redeemed during the twelve months beginning on October 15,
2018 or thereafter, plus accrued and unpaid interest, if any, 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, if any, thereon to the repurchase date.
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