Metro PCS 2008 Annual Report Download - page 90

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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 Wireless), 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 $250.0 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
Wireless, 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 in November 2013. The revolving credit facility will
mature in November 2011.
The facilities under the senior secured credit agreement are guaranteed by MetroPCS Communications, Inc.,
MetroPCS, Inc. and each of Wireless’ direct and indirect present and future wholly-owned domestic subsidiaries.
The facilities are not guaranteed by Royal Street, but Wireless has pledged the promissory note given by Royal
Street in connection with amounts borrowed by Royal Street from Wireless 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 Wireless as well as
substantially all of the present and future assets of Wireless 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, Wireless 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. Wireless 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, Wireless 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 Wireless’ 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, Wireless 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%.
On April 30, 2008, Wireless entered into an additional two-year interest rate protection agreement to manage its
interest rate risk exposure. The agreement was effective on June 30, 2008 and covers a notional amount of $500.0
million and effectively converts this portion of Wireless’ variable rate debt to fixed rate debt at an annual rate of
5.464%. The monthly interest settlement periods began on June 30, 2008. The interest rate protection agreement
expires on June 30, 2010.