Item 1.01 Entry into a Material Definitive Agreement.
Supplemental Indentures; Public Notes Issuance
On
January 25, 2018,
T-Mobile
USA, Inc.
(T-Mobile
USA), a direct, wholly-owned subsidiary of
T-Mobile
US, Inc. (the
Company), issued $1.0 billion in aggregate principal amount of its 4.500% Senior Notes due 2026 (the 2026 Notes) and $1.5 billion in aggregate principal amount of its 4.750% Senior Notes due 2028 (the 2028
Notes and, together with the 2026 Notes, the Public Notes) pursuant to an Indenture (the Base Indenture), dated as of April 28, 2013, among
T-Mobile
USA, the guarantors party
thereto and Deutsche Bank Trust Company Americas, as trustee (the Trustee), as amended and supplemented by (i) the Thirty-Second Supplemental Indenture, dated as of January 25, 2018 (the Thirty-Second Supplemental
Indenture), among
T-Mobile
USA, the Company, the other guarantors party thereto and the Trustee, with respect to the 2026 Notes and (ii) the Thirty-Third Supplemental Indenture, dated as of
January 25, 2018 (the Thirty-Third Supplemental Indenture), among
T-Mobile
USA, the Company, the other guarantors party thereto and the Trustee, with respect to the 2028 Notes (the Base
Indenture, as amended and supplemented by each of the Thirty-Second Supplemental Indenture and the Thirty-Third Supplemental Indenture, each an Indenture and, collectively, the Indentures). The 2026 Notes will bear interest
at a rate of 4.500% per year and mature on February 1, 2026. The 2028 Notes will bear interest at a rate of 4.750% per year and mature on February 1, 2028.
T-Mobile
USA will pay interest on each
series of Public Notes semiannually in arrears on each February 1 and August 1, commencing August 1, 2018. The net proceeds from the sale of the Public Notes are expected to be used to refinance higher interest and shorter maturity
notes and for general corporate purposes, including partial paydown of borrowings under T-Mobile USAs revolving credit facilities.
The Public Notes
will be guaranteed on a senior unsecured basis by the Company and all of
T-Mobile
USAs wholly-owned domestic restricted subsidiaries (excluding certain designated special purpose entities, designated
unrestricted subsidiaries, a reinsurance subsidiary and immaterial subsidiaries), all of
T-Mobile
USAs restricted subsidiaries that guarantee other material indebtedness, and any future subsidiary of the
Company that directly or indirectly owns any of
T-Mobile
USAs equity interests (the Guarantors). The Public Notes and the guarantees will be
T-Mobile
USAs and the Guarantors senior unsecured obligations and will rank equally in right of payment with all of
T-Mobile
USAs and the Guarantors existing and future indebtedness and other
liabilities that are not by their terms subordinated in right of payment to the Public Notes and the guarantees, and will rank senior in right of payment to any future indebtedness of
T-Mobile
USA or any
Guarantor that provides by its terms that it is subordinated in right of payment to the Public Notes and the guarantees. The Public Notes and the guarantees will be effectively subordinated to all of
T-Mobile
USAs and the Guarantors existing and future secured indebtedness to the extent of the assets securing such indebtedness, and will be structurally subordinated to all of the liabilities and preferred stock of any of
T-Mobile
USAs subsidiaries that do not guarantee the Public Notes.
If
T-Mobile
USA experiences specific kinds of changes of control as set forth in the Indentures and any such change of control is accompanied or followed by ratings downgrades during a specified period of time
after the change of control, any holder of the Public Notes may require
T-Mobile
USA to repurchase all or a portion of the applicable Public Notes so held at a price equal to 101% of the principal amount of
such Public Notes, plus any accrued and unpaid interest on the Public Notes repurchased to, but not including, the date of repurchase.
The Indentures
contain covenants that, among other things, restrict the ability of
T-Mobile
USA and its restricted subsidiaries to incur more debt, pay dividends and make distributions, make certain investments, repurchase
stock, create liens or other encumbrances, enter into transactions with affiliates, enter into agreements that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their
assets. These limitations are subject to a number of important qualifications and exceptions.
Each Indenture contains customary Events of Default (as
defined in each Indenture), including:
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default for 30 days in the payment when due of interest on the Public Notes of the applicable series;
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default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Public Notes of the applicable series;
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failure by
T-Mobile
USA to comply with its other obligations under the Indentures, in certain cases subject to notice and grace periods;
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payment defaults and accelerations with respect to other indebtedness of
T-Mobile
USA and certain of its restricted subsidiaries in the aggregate principal amount of
$100.0 million or more;
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specified events involving bankruptcy, insolvency or reorganization of
T-Mobile
USA or certain of its restricted subsidiaries; and
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failure by
T-Mobile
USA or certain of its restricted subsidiaries to pay certain final judgments aggregating in excess of $100.0 million within 60 days of such final
judgment.
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Upon an Event of Default, the trustee or the holders of at least 25% in aggregate principal amount of the Public Notes of the
applicable series then outstanding may declare all the Public Notes of such series to be due and payable immediately. In the case of Events of Default relating to bankruptcy, insolvency or reorganization, all outstanding Public Notes of the
applicable series will become due and payable immediately without further action or notice.
This description of the Thirty-Second Supplemental Indenture
and the Thirty-Third Supplemental Indenture is a summary only and is qualified in its entirety by the full and complete terms of the Thirty-Second Supplemental Indenture and the Thirty-Third Supplemental Indenture, which are filed as Exhibits 4.1
and 4.2, respectively, to this Current Report on Form
8-K
and incorporated herein by reference.
DT Notes
On January 22, 2018,
T-Mobile
USA, the Company, and the guarantors party thereto (including the
Company) entered into a purchase agreement (the Purchase Agreement) with the Companys majority stockholder, Deutsche Telekom AG (DT), pursuant to which
T-Mobile
USA has agreed to
issue and sell to DT, and DT has agreed to purchase, $1.0 billion in aggregate principal amount of 4.500% senior notes due 2026 and $1.5 billion in aggregate principal amount of 4.750% senior notes due 2028 (collectively, the DT
Notes) directly from
T-Mobile
USA.
T-Mobile
USA is not required to pay any upfront fees, underwriting fees, new issuance concession or other consideration to DT in
connection with the issuance and sale of the DT Notes. The DT Notes will have substantially the same terms and conditions as each of the 2026 Notes and the 2028 Notes, as applicable, other than issue date, registration rights and CUSIP. In addition,
the DT Notes will be issued under separate supplemental indentures and will each constitute a separate series from the Public Notes for all purposes, including voting; provided that if
T-Mobile
USA exercises
its rights in respect of a series of Public Notes,
T-Mobile
USA will exercise the same rights in respect of the DT Notes of the corresponding series on an equal and ratable basis.
The DT Notes will be issued and sold to DT without being registered under the Securities Act of 1933, as amended (the Securities Act), in reliance
upon an exemption therefrom. Neither the Company nor
T-Mobile
USA will be required to file a registration statement with the Securities and Exchange Commission (the SEC) providing for the
registration under the Securities Act of the DT Notes prior to the date that is six months after the issuance date of the DT Notes.
T-Mobile
USA expects to use the issuance and sale of the DT Notes to refinance existing indebtedness by exchanging the DT Notes for all $1.25 billion in aggregate principal amount of
T-Mobile
USAs 8.097% Senior Reset Notes due 2021 (the 2021 Notes) and all $1.25 billion in aggregate principal amount of
T-Mobile
USAs 8.195%
Senior Reset Notes due 2022 (the 2022 Notes) held by DT. In connection with the exchange, T-Mobile USA will pay DT in cash the premium portion of the redemption price set forth in the indenture governing the 2021 Notes and the 2022
Notes, plus accrued but unpaid interest on the 2021 Notes and the 2022 Notes to, but not including, the exchange date. The closing of the issuance and sale of the DT Notes to DT, and exchange of the 2021 Notes and 2022 Notes, is expected to occur on
or about April 30, 2018.
DT is the Companys majority stockholder and a holder of a portion of
T-Mobile
USAs outstanding debt, as further described in the Companys periodic reports with the SEC.
This description of the Purchase Agreement is a
summary only and is qualified in its entirety by the full and complete terms of the Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form
8-K
and incorporated herein by reference.