8-KLeadership ChangesMaterial AgreementsOther Events+1

T-Mobile US, Inc. 8-K Report, Material Agreement (Nov 20, 2013)

Filed November 20, 2013For Securities:TMUSTMUSZTMUSITMUSL

Summary

This Form 8-K filing by T-Mobile US, Inc. on November 20, 2013, primarily details a significant equity offering and an amendment to its credit agreement. The company successfully completed a public offering of approximately 72.77 million shares of common stock at $25.00 per share, raising substantial capital. This offering diluted the ownership percentage of majority stockholder Deutsche Telekom, leading to a minor adjustment in board representation and the role of a specific director. Furthermore, T-Mobile US amended its existing Credit Agreement with Deutsche Telekom and other lenders. The key change involves a modification of the Debt to Cash Flow Ratio covenant, temporarily increasing the maximum allowable ratio to 5.00 to 1.00 until the end of 2013, and then progressively lowering it. This amendment provides T-Mobile with greater financial flexibility in the short term, likely to support its ongoing operations and growth initiatives, while still maintaining a clear path toward deleveraging over time.

Key Highlights

  • 1T-Mobile US completed a public offering of common stock, selling approximately 72.77 million shares (including overallotment) at $25.00 per share, generating significant capital.
  • 2The equity offering diluted Deutsche Telekom's majority ownership, resulting in a reduction of its board designees from eight to seven.
  • 3Srikant M. Datar resigned and was immediately re-appointed as an independent director and Chair of the Audit Committee, no longer being considered a Deutsche Telekom designee.
  • 4Amendment No. 1 to the Credit Agreement was entered into with Deutsche Telekom and other lenders.
  • 5The amendment temporarily relaxes the Debt to Cash Flow Ratio covenant, increasing the maximum allowed from 4.00:1.00 to 5.00:1.00 for periods ending on or before December 31, 2013.
  • 6The maximum Debt to Cash Flow Ratio will be 4.50:1.00 for periods ending in 2014 and revert to 4.00:1.00 thereafter.
  • 7This amendment provides T-Mobile with increased flexibility for incurring additional indebtedness in the near term.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report on two significant events: the completion of a substantial public offering of T-Mobile US common stock and an amendment to its credit agreement with Deutsche Telekom and other lenders.

T-Mobile US raised capital through the sale of approximately 72.77 million shares of common stock at an offering price of $25.00 per share, which includes the exercise of the underwriters' overallotment option. This would amount to approximately $1.82 billion in gross proceeds.

The amendment to the Credit Agreement temporarily increases the maximum allowable Debt to Cash Flow Ratio. This provides T-Mobile with more flexibility to incur additional debt in the short term, with the ratio allowed to be as high as 5.00:1.00 for periods ending by December 31, 2013, before gradually decreasing in subsequent years.

The resignation and immediate re-appointment of director Srikant M. Datar was a technical adjustment. Deutsche Telekom's ownership dilution from the equity offering reduced its right to designate board members. Mr. Datar, previously a Deutsche Telekom designee, resigned to allow the company to comply with the agreement, and was then re-appointed as an independent director, maintaining his role on the Audit Committee.