US Cellular 2011 Annual Report Download - page 68

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13 DEBT (Continued)
certain matters at the time of each borrowing. U.S. Cellular believes it was in compliance as of
December 31, 2011 with all covenants and other requirements set forth in the revolving credit facility.
In connection with U.S. Cellular’s revolving credit facility, TDS and U.S. Cellular entered into a
subordination agreement dated December 17, 2010 together with the administrative agent for the lenders
under U.S. Cellular’s revolving credit agreement. Pursuant to this subordination agreement, (a) any
consolidated funded indebtedness from U.S. Cellular to TDS will be unsecured and (b) any
(i) consolidated funded indebtedness from U.S. Cellular to TDS (other than ‘‘refinancing indebtedness’’
as defined in the subordination agreement) in excess of $105,000,000, and (ii) refinancing indebtedness
in excess of $250,000,000, will be subordinated and made junior in right of payment to the prior payment
in full of obligations to the lenders under U.S. Cellular’s revolving credit agreement. As of December 31,
2011, U.S. Cellular had no outstanding consolidated funded indebtedness or refinancing indebtedness
that was subordinated to the revolving credit agreement pursuant to the subordination agreement.
At December 31, 2011, U.S. Cellular has recorded $3.8 million of issuance costs related to the revolving
credit facility which is included in Other assets and deferred charges in the Consolidated Balance Sheet.
Long-Term Debt
Long-term debt at December 31, 2011 and 2010 was as follows:
December 31, Issuance date Maturity date Call date (1) 2011 2010
(Dollars in thousands)
Unsecured Senior Notes (2)
December 2003 December 2033 December 2003
6.7% .................. and June 2004 $544,000 $544,000
Less: 6.7% Unamortized
discount .............. (9,889) (10,343)
534,111 533,657
6.95% (3) ............... May 2011 May 2060 May 2016 342,000 —
7.5% (4) ................ June 2004 June 2034 June 2009 — 330,000
Obligation on capital leases .... 4,336 4,385
Total long-term debt ........ 880,447 868,042
Less: Current portion of
long-term debt ........... 127 101
Total long-term debt, excluding
current portion ........... $880,320 $867,941
(1) U.S. Cellular may redeem the 6.95% Senior Notes, in whole or in part at any time after the call date, at a
redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest.
U.S. Cellular may redeem the 6.7% Senior Notes, in whole or in part, at any time prior to maturity at a
redemption price equal to the greater of (a) 100% of the principal amount of such notes, plus accrued and
unpaid interest, or (b) the sum of the present values of the remaining scheduled payments of principal and
interest thereon discounted to the redemption date on a semi-annual basis at the Treasury Rate plus 30 basis
points.
(2) Interest on the 6.7% Senior Notes is payable semi-annually, and on the 6.95% Senior Notes is payable
quarterly.
(3) Capitalized debt issuance costs totaled $11.0 million and are being amortized over the life of the notes. Such
issuance costs are included in Other assets and deferred charges.
(4) On June 20, 2011, U.S. Cellular used substantially all of the net proceeds from the issuance of the 6.95%
Senior Notes to redeem $330 million (the entire outstanding amount) of its unsecured 7.5% Senior Notes at a
redemption price equal to 100% of the principal amount plus accrued and unpaid interest to the redemption
date. This redemption required U.S. Cellular to write-off to interest expense $8.2 million of previously capitalized
debt issuance costs related to the 7.5% Senior Notes in 2011.
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