8-KMaterial AgreementsExhibits & Filings

T-Mobile US, Inc. 8-K Report, Material Agreement (Apr 29, 2016)

Filed April 29, 2016For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. (TMUS) announced on April 29, 2016, a material definitive agreement with its majority stockholder, Deutsche Telekom AG (DT), for the issuance and sale of up to $650 million in aggregate principal amount of T-Mobile USA's 6.000% Senior Notes due 2024. These notes will be issued on terms similar to previously issued notes, with a potential issuance date up to November 30, 2016. The proceeds are earmarked for strategic uses, primarily for low-band spectrum acquisitions, with secondary options for debt refinancing or general corporate purposes. This transaction signifies DT's continued commitment and investment in T-Mobile US's growth initiatives, particularly in acquiring crucial spectrum assets that are vital for enhancing network capabilities and competitive positioning. The agreement allows T-Mobile US flexibility in determining the final issuance amount up to $650 million and the precise issuance date, while also providing an option to terminate the commitment, subject to reimbursement for DT's hedging costs. The notes will be guaranteed by the same entities as existing senior notes and will carry the same 6.000% interest rate, maturing on April 15, 2024. The transaction is structured as a private placement to DT, exempt from registration under the Securities Act of 1933.

Key Highlights

  • 1T-Mobile USA to issue and sell up to $650 million in aggregate principal amount of 6.000% Senior Notes due 2024 to Deutsche Telekom AG (DT).
  • 2Proceeds from the notes issuance are designated for acquisitions of low-band spectrum, with options for debt refinancing or general corporate purposes if not needed for spectrum.
  • 3The issuance date is flexible, determined by T-Mobile USA, but no later than November 30, 2016.
  • 4The purchase price will reflect an effective yield of 4.958%, based on the trading price of existing notes, ensuring favorable terms for T-Mobile.
  • 5T-Mobile has the option to terminate the purchase commitment, subject to reimbursing DT for hedging costs.
  • 6The notes will carry the same 6.000% interest rate and mature on April 15, 2024, with guarantees from existing guarantors.
  • 7The transaction is a private placement to DT, exempt from standard registration requirements, highlighting a direct financing arrangement with a major shareholder.

Frequently Asked Questions

The primary purpose of the issuance of these Senior Notes is to fund the acquisition of low-band spectrum. If these proceeds are not fully utilized for spectrum acquisitions, T-Mobile USA may use them for refinancing debt (excluding certain debt held by DT) or for general corporate purposes.

Deutsche Telekom AG (DT), T-Mobile US's majority stockholder, is purchasing the notes. The notes will bear a fixed interest rate of 6.000% per year, payable semi-annually, and will mature on April 15, 2024. The purchase price will be set to reflect an effective yield of 4.958%, based on the market trading price of T-Mobile USA's existing 2024 notes.

T-Mobile US has considerable flexibility. It can determine the aggregate principal amount of notes to be issued, up to $650 million, and the specific issuance date, which must be no later than November 30, 2016. Furthermore, T-Mobile US can terminate the purchase commitment at any time before November 5, 2016, provided it reimburses DT for any hedging costs associated with the transaction.

The new notes will be on substantially the same terms as the $1 billion of 6.000% Senior Notes due 2024 issued on April 1, 2016, with the key differences being the issue date, purchase price, initial interest payment date, and registration rights. They will carry the same interest rate and maturity date.