8-KMaterial AgreementsFinancial EventsOther Events+1

AT&T INC. 8-K Report, Material Agreement (Mar 14, 2014)

Filed March 14, 2014For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. (T) has filed a Form 8-K to report the consummation of its merger with Leap Wireless International, Inc. on March 13, 2014. This significant event marks AT&T's acquisition of Leap, integrating its operations and assets into AT&T's network. As part of the transaction, Leap stockholders received $15.00 in cash and a Contingent Value Right (CVR) per share, with the CVR offering a pro-rata share of proceeds from the future sale of a specific FCC license. The filing also details AT&T's assumption and subsequent redemption of Leap's outstanding debt. Specifically, AT&T guaranteed Leap's 7.75% Senior Notes due 2020 (aggregate principal of $1.6 billion) and has initiated a redemption process for these notes, with a redemption date set for April 14, 2014. Additionally, AT&T paid off Leap's Credit Agreement, amounting to approximately $1.83 billion. The company also addressed Leap's 4.50% Convertible Senior Notes due 2014, adjusting the conversion terms to reflect the merger consideration.

Key Highlights

  • 1AT&T has successfully completed its acquisition of Leap Wireless International, Inc.
  • 2Leap stockholders received $15.00 in cash per share, plus a Contingent Value Right (CVR) tied to a future FCC license sale.
  • 3AT&T has guaranteed Leap's $1.6 billion in 7.75% Senior Notes due 2020 and initiated their redemption.
  • 4AT&T paid approximately $1.83 billion to terminate Leap's Credit Agreement.
  • 5The conversion terms for Leap's 4.50% Convertible Senior Notes due 2014 have been modified to reflect the merger consideration.
  • 6The transaction is a significant step for AT&T in expanding its market reach and spectrum holdings.

Frequently Asked Questions

The filing states that each share of Leap common stock was converted into $15.00 in cash, plus one contingent value right (CVR) per share. At the time of the merger, there were 79,822,021 shares of Leap common stock outstanding. The filing also details AT&T's assumption and subsequent redemption/payment of Leap's outstanding debt, totaling approximately $1.6 billion for the 2020 Notes and $1.83 billion for the Credit Agreement. The total cash outlay for equity and debt would need to be calculated based on the full merger agreement and debt structures.

The Contingent Value Rights (CVRs) entitle each Leap stockholder to a pro-rata share of the net proceeds from the future sale of the FCC license with the call sign WQJQ707. This means the value of the CVR depends on AT&T's ability to sell this specific license and the price it achieves.

AT&T has guaranteed these notes and has issued a notice to redeem all outstanding 2020 Notes, which have an aggregate principal amount of $1.6 billion. The redemption date is set for April 14, 2014.

AT&T and Leap entered into a Supplemental Indenture for Leap's 4.50% Convertible Senior Notes due 2014. Upon consummation of the merger, the right to convert these notes into Leap common stock has been changed to a right to convert them into the merger consideration that holders would have received for those shares, based on the original conversion rate.