8-KOther EventsExhibits & Filings

T-Mobile US, Inc. 8-K Report, Corporate Update (Dec 5, 2012)

Filed December 5, 2012For Securities:TMUSTMUSZTMUSITMUSL

Summary

This 8-K filing from MetroPCS Communications, Inc. (which would become part of T-Mobile US, Inc.) on December 5, 2012, details a crucial step in the proposed business combination with Deutsche Telekom. The company initiated a consent solicitation for its 7 7/8% Senior Notes due 2018 and 6 5/8% Senior Notes due 2020. The primary objective of this solicitation is to amend the indentures governing these notes to prevent the impending business combination with Deutsche Telekom from being classified as a "Change of Control." These proposed amendments are designed to facilitate the merger by ensuring that the transaction does not trigger default clauses related to a change of control for these specific debt instruments. The amendments also aim to align certain covenants and non-economic terms with those anticipated in the post-combination entity, including modifications to the calculation of "Consolidated Cash Flow" to exclude certain new market launch losses. MetroPCS is offering cash payments to consenting noteholders to incentivize their approval of these significant indenture modifications.

Key Highlights

  • 1MetroPCS (now part of T-Mobile US) initiated a consent solicitation for its 7 7/8% Senior Notes due 2018 and 6 5/8% Senior Notes due 2020.
  • 2The solicitation seeks to amend the debt indentures to exclude the pending business combination with Deutsche Telekom from triggering a 'Change of Control' event.
  • 3Proposed amendments include revising the definition of 'Change of Control', modifying certain covenants, and adjusting the calculation of 'Consolidated Cash Flow'.
  • 4Specific covenant adjustments include allowing for exclusions in Consolidated Cash Flow for net losses related to new wireless market launches, up to $300 million annually.
  • 5Consenting noteholders will receive a cash payment: $5 million for the 2018 Notes and $5 million for the 2020 Notes.
  • 6The solicitation requires consents from a majority of the principal amount outstanding for each note series (excluding notes held by MetroPCS or affiliates).
  • 7The consent solicitation period is scheduled to expire on December 14, 2012, unless extended.

Frequently Asked Questions

The primary goal is to obtain consent from holders of MetroPCS's 7 7/8% Senior Notes due 2018 and 6 5/8% Senior Notes due 2020 to amend the terms of their indentures. Specifically, MetroPCS wants to ensure that the proposed business combination with Deutsche Telekom is not considered a 'Change of Control' event under these indentures, which could otherwise trigger defaults or require early repayment.

The proposed amendments include revising the 'Change of Control' definition to exclude the Deutsche Telekom merger, modifying certain restrictive covenants, adjusting the calculation of 'Consolidated Cash Flow' to permit exclusions for certain new market launch losses (up to $300 million annually), and altering thresholds for events of default. These changes aim to align the debt terms with the conditions expected after the business combination.

MetroPCS is offering a cash payment to holders who consent to the proposed amendments. An aggregate of $5 million will be paid to consenting holders of the 2018 Notes and another $5 million will be paid to consenting holders of the 2020 Notes, distributed on a pro-rata basis.

The amendments require the receipt of consents from holders representing a majority of the principal amount outstanding for each series of Notes (excluding any Notes held by MetroPCS or its affiliates). MetroPCS has the discretion to proceed with amendments for a specific note series if that series meets the majority consent threshold, even if the other does not.