8-KMaterial AgreementsFinancial EventsOther Events+1

T-Mobile US, Inc. 8-K Report, Material Agreement (Mar 22, 2013)

Filed March 22, 2013For Securities:TMUSTMUSZTMUSITMUSL

Summary

This Form 8-K filing by MetroPCS Communications, Inc. (which was later to become T-Mobile US, Inc.) on March 22, 2013, details a significant debt issuance. The company, through its subsidiary MetroPCS Wireless, Inc., completed the sale of $3.5 billion in aggregate principal amount of senior notes. Specifically, $1.75 billion of 6.250% Senior Notes due 2021 and $1.75 billion of 6.625% Senior Notes due 2023 were issued. The net proceeds from this offering, approximately $3.47 billion, are earmarked for repaying existing senior secured credit facilities, covering related liabilities and expenses, and for general corporate purposes, contingent upon the successful consummation of the proposed merger with T-Mobile USA, Inc. A critical aspect for investors is the provision for special mandatory redemption of these notes if the T-Mobile merger does not close by January 17, 2014, with redemption prices set at 100% or 101% of the principal amount depending on the timing. The notes are senior unsecured obligations and are guaranteed by the Company and its subsidiaries.

Key Highlights

  • 1Completion of a $3.5 billion senior notes offering by MetroPCS Wireless, Inc., consisting of $1.75 billion in 2021 notes and $1.75 billion in 2023 notes.
  • 2Notes carry coupon rates of 6.250% for the 2021 maturity and 6.625% for the 2023 maturity.
  • 3Net proceeds of approximately $3.47 billion are intended for debt repayment, covering liabilities and expenses, and general corporate purposes.
  • 4The use of proceeds is contingent on the successful completion of the proposed merger with T-Mobile USA, Inc.
  • 5Significant provision for a special mandatory redemption if the T-Mobile merger does not close by January 17, 2014.
  • 6The notes are senior unsecured obligations, guaranteed by MetroPCS Communications, Inc. and its subsidiaries.
  • 7Covenants restrict the ability of Wireless and its subsidiaries to incur more debt, pay dividends, make investments, and dispose of assets, among other limitations.

Frequently Asked Questions

The primary purpose of this debt issuance was to raise capital to repay MetroPCS Wireless, Inc.'s existing senior secured credit facility, cover related liabilities and expenses, and provide funds for general corporate purposes. A significant portion of the use of these proceeds is contingent on the successful completion of the then-proposed merger with T-Mobile USA, Inc.

If the proposed merger between MetroPCS and T-Mobile is not consummated by January 17, 2014, or if the Business Combination Agreement is terminated before then, all of the notes issued will be subject to a special mandatory redemption. The redemption price will be 100% of the principal amount if redeemed on or before September 30, 2013, and 101% of the principal amount if redeemed after September 30, 2013, plus accrued interest.

The notes are senior unsecured obligations of MetroPCS Wireless, Inc. and are guaranteed on a senior unsecured basis by MetroPCS Communications, Inc. and certain subsidiaries. They rank pari passu (equal in priority) with other existing and future senior unsecured indebtedness but are effectively subordinated to any secured indebtedness to the extent of the assets securing such debt and structurally subordinated to liabilities of subsidiaries that do not guarantee the notes.

The indenture includes several restrictive covenants that limit the ability of MetroPCS Wireless, Inc. and its guarantor subsidiaries. These restrictions cover incurring additional debt, paying dividends and distributions, making certain investments, repurchasing stock, creating liens, engaging in affiliate transactions, and merging or selling substantially all assets. These limitations are subject to specific qualifications and exceptions.