US Cellular 2008 Annual Report Download - page 139

In 2008, Moody’s changed its outlook on U.S. Cellular’s credit rating to stable from under review for
possible upgrade and Standard & Poor’s upgraded its credit rating on U.S. Cellular to BBB with
positive outlook from BB+ with developing outlook.
The maturity date of any borrowings under U.S. Cellular’s revolving credit facility would accelerate in the
event of a change in control.
The continued availability of the revolving credit facility requires U.S. Cellular to comply with certain
negative and affirmative covenants, maintain certain financial ratios and make representations regarding
certain matters at the time of each borrowing. The covenants also prescribe certain terms associated
with intercompany loans from TDS or TDS subsidiaries to U.S. Cellular or U.S. Cellular subsidiaries. U.S.
Cellular believes it was in compliance as of December 31, 2008 with all covenants and other
requirements set forth in its revolving credit facility. There were no intercompany loans at December 31,
2008 or 2007.
U.S. Cellular plans to renew its revolving credit facility and is maintaining an active dialogue with its
existing lenders in advance of the December 2009 expiration date of the current facility. Due to current
unfavorable credit market conditions, U.S. Cellular believes that it is unlikely to be able to obtain similar
terms as exist in the current facility. In particular, U.S. Cellular believes that the amount of the facility
could be significantly reduced, the terms of the facility could be shortened, and the pricing on the facility
could be increased. If U.S. Cellular is unable to renew its revolving credit facility or to obtain a new
revolving credit facility from alternative sources on acceptable terms or at current funding levels for any
reason, including reduced availability of credit or the consolidation of lending institutions as a result of
recent market events, U.S. Cellular’s future liquidity, capital resources, business, financial condition
and/or results of operations could be adversely affected.
Long-Term Financing
U.S. Cellular’s long-term debt indenture does not contain any provisions resulting in acceleration of the
maturities of outstanding debt in the event of a change in U.S. Cellular’s credit rating. However, a
downgrade in U.S. Cellular’s credit rating could adversely affect its ability to obtain long-term debt
financing in the future. U.S. Cellular believes it was in compliance as of December 31, 2008 with all
covenants and other requirements set forth in its long-term debt indenture. U.S. Cellular has not failed to
make nor does it expect to fail to make any scheduled payment of principal or interest under such
indenture.
U.S. Cellular filed a shelf registration statement on Form S-3 with the Securities and Exchange
Commission (‘‘SEC’’) on May 9, 2008. Because U.S. Cellular is a ‘‘well-known seasoned issuer’’ as
defined in Rule 405 under the Securities Act of 1933, as amended, such registration statement became
automatically effective upon filing with the SEC and registered an indeterminate amount of debt
securities. Under such automatic shelf registration statement, U.S. Cellular is permitted, at any time and
from time to time, to sell senior debt securities in one or more offerings in an indeterminate amount. U.S.
Cellular does not have any set time frame for issuing any specific amount of debt securities under such
registration statement at the present time. U.S. Cellular’s ability to complete an offering pursuant to such
shelf registration statement will be dependent on market conditions and other factors at the time. If U.S.
Cellular does not qualify as a ‘‘well-known seasoned issuer’’ at the time of filing of any of its Forms 10-K
in the future, U.S. Cellular will thereafter cease to be able to use this automatic shelf registration
statement until it again qualifies, or will be required to convert this automatic shelf registration statement
into another registration statement that U.S. Cellular will then be qualified to use.
The long-term debt principal payments due for the next five years comprise approximately 1% of the total
long-term debt obligation at December 31, 2008. Refer to the section Market Risk—Long-Term Debt, for
additional information regarding required principal payments and the weighted average interest rates
related to U.S. Cellular’s long-term debt.
U.S. Cellular may from time to time seek to retire or purchase its outstanding debt through cash
purchases and/or exchanges for other securities, in open market purchases, privately negotiated
transactions, tender offers, exchange offers or otherwise. Such repurchases or exchanges, if any, will
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