Item 1.01. Entry into a Material Definitive Agreement.
Indenture; Supplemental Indentures; Notes Issuance
On June 24, 2020, 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 1.500% Senior Secured Notes due 2026 (the
"2026 Notes"), $1.25 billion in aggregate principal amount of its 2.050% Senior
Secured Notes due 2028 (the "2028 Notes") and $1.75 billion in aggregate
principal amount of its 2.550% Senior Secured Notes due 2031 (the "2031 Notes"
and, together with the 2026 Notes and the 2028 Notes, the "Notes" and the
issuance of the Notes, the "Notes Offering") pursuant to the Indenture (the
"Base Indenture"), dated as of April 9, 2020, among T-Mobile USA, the Company
and Deutsche Bank Trust Company Americas, as trustee (the "Trustee"), as amended
and supplemented by (i) the Seventh Supplemental Indenture, dated as of June 24,
2020 (the "Seventh Supplemental Indenture"), with respect to the 2026 Notes,
(ii) the Eighth Supplemental Indenture, dated as of June 24, 2020 (the "Eighth
Supplemental Indenture"), with respect to the 2028 Notes and (iii) the Ninth
Supplemental Indenture, dated as of June 24, 2020 (the "Ninth Supplemental
Indenture"), each among T-Mobile USA, the Company, the other guarantors party
thereto and the Trustee (the Base Indenture, as amended and supplemented by each
of the Seventh Supplemental Indenture, the Eighth Supplemental Indenture and the
Ninth Supplemental Indenture, each an "Indenture" and, collectively, the
"Indentures").
The 2026 Notes bear interest at a rate of 1.500% per year and mature on February
15, 2026. The 2028 Notes bear interest at a rate of 2.050% per year and mature
on February 15, 2028. The 2031 Notes bear interest at a rate of 2.550% per year
and mature on February 15, 2031. T-Mobile USA will pay interest on each series
of Notes semiannually in arrears on each February 15 and August 15, commencing
February 15, 2021. The net proceeds from the sale of the Notes will be used to
refinance higher-cost unsecured notes, including $1.25 billion in aggregate
principal amount of 5.125% Senior Notes due 2025-1 held by Deutsche Telekom and
$1.0 billion in aggregate principal amount of 6.500% Senior Notes due 2024.
Deutsche Telekom is a significant stockholder of the Company and a holder of a
portion of the outstanding debt of the Company's subsidiary T-Mobile USA, Inc.,
as further described in the Company's periodic reports filed with the Securities
and Exchange Commission (the "SEC").
T-Mobile USA's obligations under the Notes will be guaranteed (such guarantees,
the "Guarantees") by the Company and each wholly-owned subsidiary of T-Mobile
USA that is not an Excluded Subsidiary (as defined in the Base Indenture) and is
or becomes an obligor of the Credit Agreement, dated as of April 1, 2020 (the
"Credit Agreement"), by and among T-Mobile USA, as borrower, Deutsche Bank AG
New York Branch, as administrative agent, and the lenders and other financial
institutions party thereto or issues or guarantees certain capital markets debt
securities, and any future direct or indirect subsidiary of the Company or any
subsidiary thereof that owns capital stock of T-Mobile USA. The Guarantees will
be provided on a senior secured basis except for the Guarantees of Sprint
Corporation ("Sprint"), Sprint Communications, Inc. and Sprint Capital
Corporation (collectively, the "Unsecured Guarantors"), which will be provided
on a senior unsecured basis (the "Unsecured Guarantees").
The Notes and the Guarantees will be T-Mobile USA's and the guarantors'
unsubordinated obligations; will be secured (except for the Unsecured
Guarantees) by a first priority security interest, subject to permitted liens,
in substantially all of T-Mobile USA's and such guarantors' present and future
assets other than Excluded Assets (as defined in the Collateral Agreement, dated
as of April 1, 2020 (the "Collateral Agreement"), by and among T-Mobile USA, the
Company and the other grantors party thereto in favor of Deutsche Bank Trust
Company Americas, as collateral trustee) on an equal and ratable basis with the
obligations under T-Mobile USA's existing secured notes and the Credit Agreement
and obligations under any other existing and future permitted first priority
secured obligations; will be senior in right of payment to any future
indebtedness of T-Mobile USA or any guarantor to the extent that such future
indebtedness provides by its terms that it is subordinated in right of payment
to the Notes and the Guarantees; will be effectively senior to all existing and
future unsecured indebtedness of T-Mobile USA or any guarantor (other than the
Unsecured Guarantors) and any future indebtedness of T-Mobile USA or any
guarantor (other than the Unsecured Guarantors) secured by a junior lien on the
collateral, in each case to the extent of the value of the collateral securing
the obligations under the Notes; will be equal in right of payment with any of
T-Mobile USA's and the guarantors' existing and future indebtedness and other
liabilities that are not by their terms subordinated in right of payment to the
Notes, including, without limitation, obligations under T-Mobile USA's existing
secured notes and the Credit Agreement, T-Mobile USA's existing unsecured notes
and the existing unsecured notes issued by the Unsecured Guarantors; and will be
structurally subordinated to all of the liabilities and other obligations of the
subsidiaries of the Company that are not obligors with respect to the Notes,
including the existing spectrum-backed notes issued under Sprint's spectrum
securitization program, factoring arrangements and tower obligations.
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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 Notes may require T-Mobile USA to repurchase all or a
portion of the Notes so held at a price equal to 101% of the principal amount of
such Notes, plus any accrued and unpaid interest on the 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 certain of its subsidiaries to (i) create liens or other
encumbrances in respect of borrowed money, (ii) merge, consolidate or sell, or
otherwise dispose of, substantially all of their assets or (iii) grant a
subsidiary guarantee of debt incurred under the Credit Agreement or certain
capital markets debt without also providing a guarantee of the Notes. 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:
• default for 30 days in the payment when due of interest on the Notes of the
applicable series;
• default in the payment when due (at maturity, upon redemption or otherwise) of
the principal of, or premium, if any, on, the Notes of the applicable series;
• failure by T-Mobile USA or its subsidiaries to comply with their other
obligations under the Indenture, subject to notice and grace periods;
• payment defaults and accelerations with respect to other indebtedness of
T-Mobile USA and certain of its subsidiaries in the aggregate principal amount
of at least the greater of (x) $250.0 million and (y) 1.0% of Consolidated Cash
Flow (as defined in the Base Indenture) on a pro forma basis over a
four-quarter test period;
• specified events involving bankruptcy, insolvency or reorganization of T-Mobile
USA or certain of its subsidiaries;
• failure by T-Mobile USA or certain of its subsidiaries to pay certain final
judgments aggregating in excess of the greater of (x) $250.0 million and (y)
1.0% of Consolidated Cash Flow on a pro forma basis over a four-quarter test
period within 60 consecutive days of such final judgment;
• other than in connection with satisfaction of the obligations under the
applicable Indenture or release of collateral in accordance with the terms of
the applicable Indenture, (i) a security interest with respect to collateral
having a fair market value in excess of 5% of Consolidated Total Assets (as
defined in the Base Indenture) ceases to be valid and perfected or is declared
invalid or unenforceable, subject to notice and a grace period, or (ii)
T-Mobile USA or a guarantor asserts in a pleading in any court of competent
jurisdiction that any security interest securing the Notes is invalid or
unenforceable.
Upon an Event of Default, the trustee or the holders of at least 30% in
aggregate principal amount of the Notes of the applicable series then
outstanding may declare all the 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 Notes of the applicable series
will become due and payable immediately without further action or notice.
The above description of the Indentures is a summary only and is subject to, and
qualified entirely by, the Base Indenture, the Seventh Supplemental Indenture,
the Eighth Supplemental Indenture and the Ninth Supplemental Indenture, which
are filed as Exhibits 4.1, 4.2, 4.3 and 4.4, respectively, to this Current
Report on Form 8-K and incorporated herein by reference.
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A press release announcing the pricing of the Notes Offering was issued in
. . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth under the caption "Indenture; Supplemental Indentures;
Notes Issuance" in Item 1.01 of this Current Report on Form 8-K is also
responsive to Item 2.03 of this Current Report on Form 8-K and is incorporated
herein by reference.
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Item 9.01. Financial Statements and Exhibits.
The following exhibits are provided as part of this Current Report on Form 8-K:
(d) Exhibits:
Exhibit No. Description
4.1 Indenture, dated as of April 9, 2020 by and among T-Mobile USA, Inc.,
the Company and Deutsche Bank Trust Company Americas, as trustee
(incorporated by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K filed on April 13, 2020).
4.2 Seventh Supplemental Indenture, dated as of June 24, 2020 by and
among T-Mobile USA, Inc., the Guarantors (as defined therein) and
Deutsche Bank Trust Company Americas, as trustee, including the Form
of 1.500% Senior Secured Note due 2026.
4.3 Eighth Supplemental Indenture, dated as of June 24, 2020, by and
among T-Mobile USA, Inc., the Guarantors (as defined therein) and
Deutsche Bank Trust Company Americas, as trustee, including the Form
of 2.050% Senior Secured Note due 2028.
4.4 Ninth Supplemental Indenture, dated as of June 24, 2020, by and among
T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche
Bank Trust Company Americas, as trustee, including the Form of 2.550%
Senior Secured Note due 2031.
4.5 Registration Rights Agreement, dated as of June 24, 2020, by and
among T-Mobile USA, Inc., the Initial Guarantors (as defined therein)
and Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc.
and Wells Fargo Securities, LLC, as representatives of the Initial
Purchasers (as defined therein).
99.1 Press Release entitled "T-Mobile Agrees to Sell $4 Billion of Senior
Secured Notes."
104.1 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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