Item 1.01
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Entry into a Material Definitive Agreement.
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Amendment to Credit Agreement
On January 24, 2020, Sprint Communications, Inc. (“Sprint Communications”), a wholly subsidiary of Sprint Corporation (the “Company”), the Company, the subsidiary guarantors party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto entered into an amendment (the “Amendment”) to the Credit Agreement, dated as of February 3, 2017 (as amended, the “Credit Agreement”). The Credit Agreement consists of a $2.0 billion revolving credit facility (the “Revolving Credit Facility”), a $4.0 billion term loan facility and an aggregate of $2.0 billion of incremental term loans. Pursuant to the Amendment, among other things, effective January 24, 2020:
(i) the availability of commitments under the Revolving Credit Facility will remain at $2.0 billion until the original maturity date of February 3, 2021, while the availability of $1.8325 billion of commitments was extended to February 3, 2022;
(ii) borrowings under the Revolving Credit Facility will accrue interest, at the option of Sprint Communications, based on either (x) the Adjusted Base Rate (as defined in the Credit Agreement) or (y) the Adjusted LIBO Rate (as defined in the Credit Agreement), in each case, plus an applicable margin (A) with respect to borrowings advanced by certain of the Revolving Credit Facility lenders based on the ratio of total indebtedness to the trailing four quarters earnings before interest, taxes, depreciation and amortization, as adjusted pursuant to the Credit Agreement (the “Leverage Ratio”) and ranging from a minimum of 0.75% to a maximum of 1.75%, with respect to the Adjusted Base Rate, and a minimum of 1.75% to a maximum of 2.75%, with respect to the Adjusted LIBO Rate and (B) with respect to borrowings advanced by certain Revolving Credit Facility lenders (a) for any day on or prior to June 30, 2020, based on the Leverage Ratio and ranging from a minimum of 0.75% to a maximum of 1.75%, with respect to the Adjusted Base Rate, and a minimum of 1.75% to a maximum of 2.75%, with respect to the Adjusted LIBO Rate, (b) for any day after June 30, 2020 and on or prior to June 30, 2021, equal to 2.5%, with respect to the Adjusted Base Rate, and 3.5%, with respect to the Adjusted LIBO Rate, and (c) for any day after June 30, 2021, equal to 3.5%, with respect to the Adjusted Base Rate, and 4.5%, with respect to the Adjusted LIBO Rate; and
(iii) the maximum Leverage Ratio was amended to equal 3.75 to 1.00 for the fiscal quarter ended December 31, 2019 and 6.0 to 1.0 for the fiscal quarter ended March 31, 2020 and each fiscal quarter ending thereafter and the minimum ratio of earnings before interest, taxes, depreciation and amortization, as adjusted pursuant to the Credit Agreement, to total interest expense for the trailing four quarters was amended to equal 3.25 to 1.00 for the fiscal quarter ended December 31, 2019 and 2.00 to 1.00 for the fiscal quarter ended March 31, 2020 and each fiscal quarter ending thereafter.
In addition, pursuant to the Amendment, among other things, effective upon receiving consents from the Required Lenders (as defined in the Credit Agreement) the method of determining whether a lease constitutes a capital lease or an operating lease under the Credit Agreement will be amended to reference GAAP as in effect from time to time rather than as of February 3, 2017.
Amendment to Receivables Facility
On January 24, 2020, Sprint Spectrum L.P., a wholly owned subsidiary of the Company, as initial servicer, certain Sprint special purpose entities, as sellers, certain commercial paper conduits and financial institutions from time to time party thereto, as purchaser agents, MUFG Bank, Ltd. f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent, SMBC Nikko Securities America, Inc., as administrative agent, and Mizuho Bank, Ltd., as administrative agent and collateral agent, entered into the Third Amendment (the “Receivables Facility Amendment’) to the Third Amended and Restated Receivables Purchase Agreement dated as of June 29, 2018 (as amended, the “Receivables Facility”).
Pursuant to the Receivables Facility Amendment, among other things: