8-KMaterial AgreementsFinancial EventsExhibits & Filings

T-Mobile US, Inc. 8-K Report, Material Agreement (Dec 30, 2016)

Filed December 30, 2016For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. (TMUS) has entered into new, significant financing arrangements with its majority stockholder, Deutsche Telekom AG (DT), to enhance its liquidity and strengthen its credit profile. On December 29, 2016, the company's subsidiary, TMUSA, secured a new three-year $2.5 billion revolving credit facility (RCF) and a $660 million secured term loan facility (TLB). The RCF is designed to be the primary source for short-term liquidity needs, replacing a smaller unsecured credit facility. The new facilities, combined with previously announced purchase commitments, represent over $7 billion in financing from DT secured in 2016. These agreements are expected to yield substantial cost savings and improve TMUS's financial flexibility. The RCF comprises a $1.0 billion unsecured tranche and a $1.5 billion secured tranche, with terms that do not include material adverse change or financial maintenance covenants, offering greater operational flexibility. The secured tranche is backed by a lien on substantially all assets of TMUSA and its guarantors. The TLB is an amendment to an existing credit facility, set to be drawn in early 2017. This move underscores DT's continued financial support for T-Mobile's growth strategy.

Key Highlights

  • 1T-Mobile US, Inc. (TMUS) secured a new $2.5 billion, three-year revolving credit facility (RCF) with Deutsche Telekom AG (DT).
  • 2A $660 million secured term loan facility (TLB) was also established with DT, amending an existing credit agreement.
  • 3The RCF is split into a $1.0 billion unsecured facility and a $1.5 billion secured facility.
  • 4These new facilities, along with previous commitments, total over $7 billion in financing from DT secured in 2016.
  • 5The new credit facilities are expected to result in significant cost of carry savings and strengthen the company's credit profile.
  • 6The RCF does not contain financial maintenance covenants, offering greater flexibility for T-Mobile's operations.
  • 7The secured RCF is backed by a first priority lien on substantially all assets of TMUSA and its guarantors.

Frequently Asked Questions

The primary benefits are expected cost of carry savings and a strengthening of T-Mobile's credit profile. The new facilities also provide enhanced liquidity and financial flexibility, particularly the RCF which does not include financial maintenance covenants.

The financing is being provided by Deutsche Telekom AG (DT), T-Mobile's majority stockholder. This signifies DT's continued strong financial support for T-Mobile and provides over $7 billion in financing secured by DT in 2016, underscoring confidence in the company's strategy.

The $2.5 billion RCF is composed of a $1.0 billion unsecured revolving credit facility and a $1.5 billion secured revolving credit facility. The secured facility is backed by a first priority lien on substantially all assets of T-Mobile USA and its guarantors, while the unsecured facility does not have this specific collateral backing.

The previous $500 million unsecured revolving credit facility, dated May 1, 2013, with DT as lender, was terminated by T-Mobile USA, Inc. on December 29, 2016, concurrent with the establishment of the new, larger RCF.