Item 1.01 Entry into a Material Definitive Agreement.
Indenture
On
October 13, 2017 SBA Communications Corporation (“SBA”) and U.S. Bank National Association, as trustee, executed an indenture (the “Indenture”) pursuant to which SBA issued its 4.000% Senior Notes due 2022 (the
“Notes”). The Notes have an interest coupon of 4.000% and were issued at a price of 100% of their face value. Interest on the Notes is payable semi-annually on April 1 and October 1 of each year, beginning on April 1, 2018.
The Notes mature on October 1, 2022.
SBA may redeem the Notes, in whole or in part, at any time on or after October 1, 2019 at
the applicable redemption price. In addition, until October 1, 2020, SBA may redeem up to 35% of the aggregate principal amount of the Notes with the net proceeds of certain equity offerings at a redemption price of 104.000% of the principal
amount of the Notes to be redeemed plus accrued and unpaid interest, if any, and additional interest, if any, to the redemption date. SBA may also redeem any of the Notes at any time prior to October 1, 2019 at a redemption price equal to 100%
of the principal amount of the Notes to be redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, and additional interest, if any, to, the redemption date. The Applicable Premium means, with respect to any Note on any
redemption date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such redemption date of (1) the redemption price of such Note at October 1, 2019 (as set forth in the
Indenture), plus (2) all required interest payments due on such Note through October 1, 2019 (excluding accrued but unpaid interest, if any, to the redemption date), computed using a discount rate equal to the treasury rate on such
redemption date plus 50 basis points over (B) the principal amount of such Note.
The Notes are SBA’s senior unsecured
obligations and are not guaranteed by any of its subsidiaries. The Notes rank equally in right of payment with SBA’s existing and future senior unsecured debt, and senior in right of payment to SBA’s future subordinated debt, if any. The
Notes are effectively subordinated to any of SBA’s existing and future secured debt to the extent of the value of the assets securing such debt. In addition, the Notes are structurally subordinated to all existing and future debt and other
liabilities of SBA’s subsidiaries.
If SBA experiences a Change of Control and a Ratings Decline (each as defined in the Indenture),
each holder of the Notes will have the right to require SBA to repurchase all or any part, of such holder’s Notes at a repurchase price equal to 101% of the aggregate principal amount of any Notes repurchased plus accrued and unpaid interest,
if any, and additional interest, if any, to the repurchase date.
The Indenture provides that each of the following is an Event of Default
(as defined in the Indenture) with respect to the Notes: (1) default for 30 days in the payment when due of interest, or additional interest, if any, with respect to the Notes; (2) default in payment when due of the principal of or
premium, if any, on the Notes; (3) failure by SBA or any of the Restricted Subsidiaries (as defined in the Indenture) to comply with covenants relating to a merger, consolidation or a sale of assets, as described in the Indenture, or failure by
SBA to consummate a Change of Control Offer or Asset Sale Offer (each as defined in the Indenture) in accordance with the provisions of the Indenture applicable to the offers; (4) subject to a notice requirement and a cure period, failure by
SBA or any of the Restricted Subsidiaries to perform any other covenant in the Indenture, other than a covenant specified in clauses (1), (2) or (3) above, that continues for 60 days (or 120 days in the case of a failure to comply with the
reporting obligations described in the Indenture) after notice to comply; (5) default under any Indebtedness (as defined in the Indenture) for money borrowed by SBA or any of its Significant Subsidiaries (as defined in the Indenture), or the
payment of which is guaranteed by SBA or any of its Significant Subsidiaries, whether such Indebtedness or guarantee now exists or is created after October 13, 2017, which default (a) is caused by a failure to pay principal of or premium, if
any, interest, if any, or Additional Interest (as defined in the Indenture), if any, with respect to the Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of the default (a “Payment
Default”); or (b) results in the acceleration of the Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20.0 million or more; (6) failure by SBA or any of its Significant Subsidiaries to pay final judgments aggregating (net of amounts covered by
insurance policies) in excess of $20.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; or (7) certain events of bankruptcy or insolvency described in the Indenture with respect to SBA or any of its
Restricted Subsidiaries.
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If any Event of Default occurs and is continuing, the trustee under the Indenture or the holders
of at least 25% in aggregate principal amount of the then outstanding Notes and the trustee may, and the trustee at the request of such holders will, declare all the Notes to be due and payable immediately. If certain bankruptcy and insolvency
Events of Default specified in the Indenture occur with respect to SBA, all outstanding Notes will become due and payable without any other act on the part of the trustee or the holders.
The Indenture contains customary covenants, including restrictions on SBA’s ability to incur indebtedness, or liens securing
indebtedness, merge, consolidate or sell assets, make restricted payments, including paying dividends or making other distributions, enter into transactions with affiliates, enter into sale and leaseback transactions and issue guarantees of
indebtedness. The covenants are subject to a number of exceptions and qualifications.
Certain of the initial purchasers and their
affiliates have engaged, and may in the future engage, in investment banking, commercial banking and other financial advisory and commercial dealings with SBA and its affiliates. In addition, certain of the initial purchasers or their affiliates
serve in various roles under SBA’s Senior Credit Agreement, including as lenders under the Revolving Credit Facility. Accordingly, such lenders will receive a portion of the net proceeds from this offering.
Registration Rights Agreement
On October 13, 2017, in connection with the issuance of the Notes, SBA entered into a Registration Rights Agreement (the
“Registration Rights Agreement”) with Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as representatives of the initial purchasers. Pursuant to the terms of the Registration Rights Agreement, SBA agreed to use its reasonable
best efforts to (i) file a registration statement with respect to an offer to exchange the Notes for new notes registered under the Securities Act of 1933, as amended, (ii) have such registration statement remain effective until 180 days
after the last date of acceptance for exchange for use by one or more participating broker-dealers, (iii) commence the exchange offer promptly after the registration statement is declared effective by the Securities and Exchange Commission and
(iv) complete the exchange offer on or prior to October 8, 2018. If SBA fails to satisfy certain filing and other obligations with respect to the exchange, SBA will be obligated to pay additional interest of 0.25%
per annum for the first
90-day
period and an additional 0.25% per annum with respect to each subsequent
90-day
period thereafter, until SBA’s registration
obligations are fulfilled, up to a maximum of 1.00% per annum.
The description above is qualified in its entirety by the Indenture and
the Registration Rights Agreement which are filed with this Form
8-K.
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