Metro PCS 2011 Annual Report Download - page 95

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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.
In July 2010, Wireless entered into the Amendment which amended and restated the senior secured credit facility to,
among other things, extend the maturity of the Tranche B-2 Term Loans under the senior secured credit facility to November
2016 as well as increase the interest rate to the London Inter Bank Offered Rate, or LIBOR, plus 3.50% on the extended portion
only and reduce the revolving credit facility from $100.0 million to $67.5 million.
In March 2011, Wireless entered into the New Amendment which further amends and restates the senior secured credit
facility, as amended, to, among other things, provide for the Tranche B-3 Term Loans, which will mature in March 2018 and
have an interest rate of LIBOR plus 3.75%. The New Amendment also increases the interest rate on the existing Tranche B-2
Term Loans under the senior secured credit facility, as amended, to LIBOR plus 3.821%. In addition, the aggregate amount of
the revolving credit facility was increased from $67.5 million to $100.0 million and the maturity of the revolving credit facility
was extended to March 2016. The New Amendment modified certain limitations under the senior secured credit facility, as
amended, including limitations on our ability to incur additional debt, make certain restricted payments, sell assets, make
certain investments or acquisitions, grant liens and pay dividends. In addition, Wireless is no longer subject to certain financial
covenants, including maintaining a maximum senior secured consolidated leverage ratio. However, under certain
circumstances, we could be subject to certain financial covenants that contain ratios based on consolidated Adjusted EBITDA
as defined by the senior secured credit facility, as amended. Under the New Amendment, the definition of consolidated
Adjusted EBITDA has changed and no longer excludes interest and other income.
In May 2011, Wireless entered into the Incremental Agreement which supplements the New Amendment to provide for
the Incremental Tranche B-3 Term Loans which amount was borrowed on May 10, 2011. The Incremental Tranche B-3 Term
Loans have an interest rate of LIBOR plus 3.75% and will mature in March 2018. The Incremental Tranche B-3 Term Loans
are repayable in quarterly installments of $2.5 million. A portion of the proceeds from the Incremental Tranche B-3 Term Loans
were used to prepay the $535.8 million in outstanding principal under the Tranche B-1 Term Loans, with the remaining
proceeds to be used for general corporate purposes, including opportunistic spectrum acquisitions. The net proceeds from the
Incremental Tranche B-3 Term Loans were $455.5 million after prepayment of the Tranche B-1 Term Loans, underwriter fees,
other debt issuance costs of approximately $7.9 million. The Incremental Agreement did not modify the interest rate, maturity
date or any of the other terms of the New Amendment applicable to the Tranche B-2 Term Loans or the existing Tranche B-3
Term Loans.
The facilities under the senior secured credit agreement, as amended, are guaranteed by MetroPCS Communications, Inc.,
MetroPCS, Inc. and each of Wireless' direct and indirect present and future wholly-owned domestic subsidiaries. The senior
secured credit facility, as amended, contains customary events of default, including cross defaults. The obligations under the
senior secured credit facility 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).
In March 2009, Wireless entered into three separate two-year interest rate protection agreements to manage the
Company's interest rate risk exposure under the senior secured credit facility, as amended. These agreements were effective on
February 1, 2010 and covered a notional amount of $1.0 billion and effectively converted this portion of Wireless' variable rate
debt to fixed rate debt at a weighted average annual rate of 5.927%. These agreements expired on February 1, 2012.
In October 2010, Wireless entered into three separate two-year interest rate protection agreements to manage the
Company's interest rate risk exposure under the senior secured credit facility, as amended. These agreements were effective on
February 1, 2012 and cover a notional amount of $950.0 million and effectively convert this portion of Wireless' variable rate
debt to fixed rate debt at a weighted average annual rate of 4.908%. The monthly interest settlement periods began on February
1, 2012. These agreements expire on February 1, 2014.
In April 2011, Wireless entered into three separate three-year interest rate protection agreements to manage its interest
rate risk exposure under the senior secured credit facility, as amended. These agreements were effective on April 15, 2011 and
cover a notional amount of $450.0 million and effectively convert this portion of Wireless’ variable rate debt to fixed rate debt
at a weighted average annual rate of 5.242%. The monthly interest settlement periods began on April 15, 2011. These