Metro PCS 2009 Annual Report Download - page 101

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89
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 9¼% senior 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 expired on February 1, 2010.
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.
In March 2009, Wireless entered into three separate two-year interest rate protection agreements to manage the
Company’s interest rate risk exposure. These agreements are effective on February 1, 2010 and cover a notional
amount of $1.0 billion and effectively convert this portion of Wireless’ variable rate debt to fixed rate debt at a
weighted average annual rate of 4.381%. The monthly interest settlement periods will begin on February 1, 2010.
These agreements expire on February 1, 2012.
9¼% Senior Notes Due 2014
On November 3, 2006, Wireless consummated the sale of $1.0 billion principal amount of its 9¼% senior notes
due 2014, or initial notes. On June 6, 2007, Wireless consummated the sale of the additional notes. The initial notes
and the additional notes are referred to together as the existing 9¼% senior notes. The existing 9¼% senior notes are
unsecured obligations and are guaranteed by MetroPCS Communications, Inc., MetroPCS, Inc., and all of Wireless
direct and indirect wholly-owned domestic restricted subsidiaries, but are not guaranteed by Royal Street. Interest is
payable on the initial notes on May 1 and November 1 of each year, beginning with May 1, 2007, with respect to
the initial notes, and beginning on November 1, 2007 with respect to the additional notes. On January 14, 2009,
Wireless completed the sale of the New 9¼% Senior Notes at a price equal to 89.50% of the principal amount of
such new notes. On January 20, 2009, Wireless consummated the sale of the New 9¼% Senior Notes resulting in
net proceeds of $480.3 million. The New 9¼% Senior Notes are unsecured obligations and are guaranteed by
MetroPCS, MetroPCS, Inc., and all of Wireless’ direct and indirect wholly-owned subsidiaries, but are not
guaranteed by Royal Street. Interest is payable on the New 9¼% Senior Notes on May 1 and November 1 of each
year, beginning on May 1, 2009. The existing 9¼% senior notes together with the New 9¼% Senior Notes are
referred to herein as the 9¼% senior sotes. Wireless may, at its option, redeem some or all of the 9¼% senior notes
at any time on or after November 1, 2010 for the redemption prices set forth in the indenture governing the
9¼% senior notes. In addition, Wireless may also redeem up to 35% of the aggregate principal amount of the
9¼% senior notes with the net cash proceeds of certain sales of equity securities, including the sale of common
stock.