Cricket Wireless 2012 Annual Report Download - page 84

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) 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.
Under the Credit Agreement, Leap and its restricted subsidiaries are subject to certain limitations, including
limitations on their ability to: incur additional debt or sell assets, make certain investments, grant liens and pay
dividends and make certain other restricted payments. In addition, Cricket will be required to pay down the
facility under certain circumstances if Leap and its restricted subsidiaries issue debt, sell assets or property,
receive certain extraordinary receipts or generate excess cash flow (as defined in the Credit Agreement).
The Credit Agreement also provides for an event of default upon the occurrence of a change of control,
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. If the indebtedness under the Credit Agreement was
accelerated prior to maturity as a result of such change of control, this would give rise to an event of default
under the indentures governing our secured and unsecured senior notes and convertible notes.
Senior Notes
Discharge of Indenture and Loss on Extinguishment of Debt
On October 10, 2012, in connection with our entry into the Credit Agreement, we issued a notice of
redemption to redeem all of our 10% unsecured senior notes due 2015 in accordance with the optional
redemption provisions governing the notes at a redemption price of 105% of the principal amount of outstanding
notes, plus accrued and unpaid interest to the redemption date. On November 9, 2012, we completed the
redemption for a total cash payment of $324.5 million and the indenture governing the notes was satisfied and
discharged in accordance with its terms. As a result of this redemption, we recognized a $18.6 million loss on
extinguishment of debt during the year ended December 31, 2012, which was comprised of $15.0 million in
redemption premium, $3.5 million in unamortized debt issuance costs and $0.1 million in professional fees.
Discharge of Non-Negotiable Promissory Note Due 2015
Cricket service was previously offered in greater Chicago and Southern Wisconsin by Denali, an entity in
which the Company previously owned an 82.5% non-controlling membership interest. In December 2010,
Cricket purchased the remaining 17.5% controlling membership interest in Denali that it did not previously own.
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