Metro PCS 2007 Annual Report Download - page 89

78
On November 3, 2006, MetroPCS II repaid the aggregate outstanding principal balance under the secured bridge
credit facility of $1.25 billion and accrued interest of $5.9 million. As a result, MetroPCS II recorded a loss on
extinguishment of debt of approximately $7.0 million.
In October 2006, MetroPCS IV, Inc., an indirect wholly-owned subsidiary of MetroPCS Communications, Inc.
(which has since merged into MetroPCS Wireless, Inc.), entered into an additional Exchangeable Senior Unsecured
Bridge Credit Facility, or the unsecured bridge credit facility. The aggregate credit commitments available under the
unsecured bridge credit facility were $250 million and were fully funded.
On November 3, 2006, MetroPCS IV, Inc. repaid the aggregate outstanding principal balance under the unsecured
bridge credit facility of $250.0 million and accrued interest of $1.2 million. As a result, MetroPCS IV, Inc. recorded
a loss on extinguishment of debt of approximately $2.4 million.
Senior Secured Credit Facility
MetroPCS Wireless, Inc., an indirect wholly-owned subsidiary of MetroPCS Communications, Inc., entered into
the Senior Secured Credit Facility on November 3, 2006, or senior secured credit facility. The senior secured credit
facility consists of a $1.6 billion term loan facility and a $100 million revolving credit facility. The term loan facility
is repayable in quarterly installments in annual aggregate amounts equal to 1% of the initial aggregate principal
amount of $1.6 billion. The term loan facility will mature seven years following the date of its execution in
November 2006. The revolving credit facility will mature five years following the date of its execution in November
2006.
The facilities under the senior secured credit agreement are guaranteed by MetroPCS Communications, Inc.,
MetroPCS, Inc. and each of MetroPCS Wireless, Inc.’ s direct and indirect present and future wholly-owned
domestic subsidiaries. The facilities are not guaranteed by Royal Street or its subsidiaries, but MetroPCS Wireless,
Inc. has pledged the promissory note given by Royal Street in connection with amounts borrowed by Royal Street
from MetroPCS Wireless, Inc. and we pledged the limited liability company member interests we hold in Royal
Street. The senior secured credit facility contains customary events of default, including cross defaults. The
obligations are also secured by the capital stock of MetroPCS Wireless, Inc. as well as substantially all of the present
and future assets of MetroPCS Wireless, Inc. and each of its direct and indirect present and future wholly-owned
subsidiaries (except as prohibited by law and certain permitted exceptions).
Under the senior secured credit agreement, MetroPCS Wireless, Inc. will be subject to certain limitations,
including limitations on its ability to incur additional debt, make certain restricted payments, sell assets, make
certain investments or acquisitions, grant liens and pay dividends. MetroPCS Wireless, Inc. is also subject to certain
financial covenants, including maintaining a maximum senior secured consolidated leverage ratio and, under certain
circumstances, maximum consolidated leverage and minimum fixed charge coverage ratios. There is no prohibition
on our ability to make investments in or loan money to Royal Street.
Amounts outstanding under our senior secured credit facility bear interest at a LIBOR rate plus a margin as set
forth in the facility and the terms of the senior secured credit facility require us to enter into interest rate hedging
agreements that fix the interest rate in an amount equal to at least 50% of our outstanding indebtedness, including
the notes.
On November 21, 2006, MetroPCS Wireless, Inc. entered into a three-year interest rate protection agreement to
manage its interest rate risk exposure and fulfill a requirement of its senior secured credit facility. The agreement
covers a notional amount of $1.0 billion and effectively converts this portion of MetroPCS Wireless, Inc.’ s variable
rate debt to fixed-rate debt at an annual rate of 7.169%. The quarterly interest settlement periods began on
February 1, 2007. The interest rate protection agreement expires on February 1, 2010.
On February 20, 2007, MetroPCS Wireless, Inc. entered into an amendment to the senior secured credit facility.
Under the amendment, the margin used to determine the senior secured credit facility interest rate was reduced to
2.25% from 2.50%.