T-MOBILE US, INC. (NASDAQ:TMUSP) Files An 8-K Entry into a Material Definitive Agreement
Item1.01 Entry into a Material Definitive Agreement.
T-Mobile USA, Inc. (T-Mobile USA), a direct, wholly-owned
subsidiary of T-Mobile US, Inc. (the Company), recently completed
the offering of $5.0 billion in aggregate principal amount of
high-yield notes, consisting of $1.5billion in aggregate
principal amount of 4.000% Senior Notes due 2022, $1.75billion in
aggregate principal amount of 5.125% Senior Notes due 2025 and
$1.75billion in aggregate principal amount of 5.375% Senior Notes
due 2027. T-Mobile USA expects to use the proceeds from the
issuance and sale to refinance higher interest, shorter maturity
notes.
The issuance and sale of $1.5 billion in aggregate principal
amount of notes in a registered public offering and the issuance
and sale of $3.5 billion in aggregate principal amount of notes
to the Companys majority stockholder, Deutsche Telekom AG (DT),
each as described further below, will be expected to strengthen
the Companys credit profile through interest savings of
approximately $81 million per annum and extension of the weighted
average maturity of the refinanced notes by more than four years.
With respect to the notes to be issued and sold to DT, the
Company will benefit from not paying any upfront fees,
underwriting fees, new issuance concession or other consideration
to DT, and such notes will be settled on a delayed basis, which
is expected to result in additional cost of carry savings to the
Company of approximately $31.5 million. These notes provide the
Company with additional flexibility compared to its existing
senior notes, including by improving its covenant package with
respect to restricted payments, permitted investments and debt
incurrence.
Supplemental Indentures; Public Notes Issuance
On March16, 2017, T-Mobile USA issued $500.0 million in aggregate
principal amount of its 4.000% Senior Notes due 2022 (the 2022
Notes), $500.0 million in aggregate principal amount of its
5.125% Senior Notes due 2025 (the 2025 Notes) and issued $500.0
million in aggregate principal amount of its 5.375% Senior Notes
due 2027 (the 2027 Notes and, together with the 2022 Notes and
the 2025 Notes, the Notes) to an Indenture (the Base Indenture),
dated as of April28, 2013, among T-Mobile USA, the guarantors
party thereto and Deutsche Bank Trust Company Americas, as
trustee, as amended and supplemented by (i)the Twenty-Third
Supplemental Indenture, dated as of March16, 2017 (the
Twenty-Third Supplemental Indenture), among T-Mobile USA, the
Company, the other guarantors party thereto and Deutsche Bank
Trust Company Americas, as trustee, with respect to the 2022
Notes, (ii)the Twenty-Fourth Supplemental Indenture, dated as of
March16, 2017 (the Twenty-Fourth Supplemental Indenture), among
T-Mobile USA, the Company, the other guarantors party thereto and
Deutsche Bank Trust Company Americas, as trustee, with respect to
the 2025 Notes, and (iii)the Twenty-Fifth Supplemental Indenture,
dated as of March16, 2017 (the Twenty-Fifth Supplemental
Indenture), among T-Mobile USA, the Company, the other guarantors
party thereto and Deutsche Bank Trust Company Americas, as
trustee, with respect to the 2027 Notes (the Base Indenture, as
amended and supplemented by each of the Twenty-Third Supplemental
Indenture, the Twenty-Fourth Supplemental Indenture and the
Twenty-Fifth Supplemental Indenture, each an Indenture and,
collectively, the Indentures). The 2022 Notes will bear interest
at a rate of 4.000%per year and mature on April15, 2022. The 2025
Notes will bear interest at a rate of 5.125%per year and mature
on April15, 2025. The 2027 Notes will bear interest at a rate of
5.375%per year and mature on April15, 2027. T-Mobile USA will pay
interest on each series of Notes semiannually in arrears on each
April15 and October15, commencing October15, 2017.
The Notes will initially be guaranteed on a senior unsecured
basis by the Company and all of T-Mobile USAs wholly-owned
domestic restricted subsidiaries (excluding certain designated
special purpose entities, a certain reinsurance subsidiary and
immaterial subsidiaries), all of T-Mobile USAs restricted
subsidiaries that guarantee certain of its indebtedness, and any
future subsidiary of the Company that directly or indirectly owns
any of T-Mobile USAs equity interests (the Guarantors). The Notes
and the guarantees will be T-Mobile USAs and the Guarantors
senior unsecured obligations and will rank equally in right of
payment with all of T-Mobile USAs and the Guarantors existing and
future indebtedness and other liabilities that are not by their
terms subordinated in right
of payment to the Notes and the guarantees, and will rank senior
in right of payment to any future indebtedness of T-Mobile USA or
any Guarantor that provides by its terms that it is subordinated
in right of payment to the Notes and the guarantees. The Notes
and the guarantees will be effectively subordinated to all of
T-Mobile USAs and the Guarantors existing and future secured
indebtedness to the extent of the assets securing such
indebtedness, and will be structurally subordinated to all of the
liabilities and preferred stock of any of T-Mobile USAs
subsidiaries that do not guarantee the Notes.
If T-Mobile USA experiences specific kinds of changes of control
as set forth in the Indentures and any such change of control is
accompanied or followed by rating downgrades during a specified
period of time after the change of control, each holder of the
2022 Notes, the 2025 Notes or 2027 Notes, as applicable, may
require T-Mobile USA to repurchase all or a portion of the 2022
Notes, the 2025 Notes or 2027 Notes, as applicable, so held at a
price equal to 101% of the principal amount of such Notes, plus
any accrued and unpaid interest on the Notes repurchased to, but
not including, the date of repurchase.
The Indentures contain covenants that, among other things,
restrict the ability of T-Mobile USA and its restricted
subsidiaries to incur more debt, pay dividends and make
distributions, make certain investments, repurchase stock, create
liens or other encumbrances, enter into transactions with
affiliates, enter into agreements that restrict dividends or
distributions from subsidiaries, and merge, consolidate or sell,
or otherwise dispose of, substantially all of their assets. These
limitations are subject to a number of important qualifications
and exceptions.
Each Indenture contains customary Events of Default (as defined
in each Indenture), including:
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default for 30 days in the payment when due of interest (including Additional Interest (as defined in each Indenture)) on the Notes of the applicable series; |
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default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes of the applicable series; failure by T-Mobile USA to comply with its other obligations under the Indentures, in certain cases subject to notice and grace periods; |
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payment defaults and accelerations with respect to other indebtedness of T-Mobile USA and certain of its restricted subsidiaries in the aggregate principal amount of $100.0 million or more; |
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specified events involving bankruptcy, insolvency or reorganization of T-Mobile USA or certain of its restricted subsidiaries; and |
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failure by T-Mobile USA or certain of its restricted subsidiaries to pay certain final judgments aggregating in excess of $100.0 million within 60 days of such final judgment. |
Upon an Event of Default, the trustee or the holders of at least
25% in aggregate principal amount of the Notes of the applicable
series then outstanding may declare all the Notes of such series
to be due and payable immediately. In the case of Events of
Default relating to bankruptcy, insolvency or reorganization, all
outstanding Notes of the applicable series will become due and
payable immediately without further action or notice.
This description of the Twenty-Third Supplemental Indenture, the
Twenty-Fourth Supplemental Indenture and the Twenty-Fifth
Supplemental Indenture is a summary only and is qualified in its
entirety by the full and complete terms of the Twenty-Third
Supplemental Indenture, the Twenty-Fourth Supplemental Indenture
and the Twenty-Fifth Supplemental Indenture, which are filed as
Exhibits 4.1, 4.2 and 4.3, respectively, to this Current Report
on Form 8-K and incorporated herein by reference.
New DT Notes
On March13, 2017, T-Mobile USA, the Company, and the guarantors
party thereto (including the Company) entered into a purchase
agreement (the Purchase Agreement) with DT, to which T-Mobile USA
has agreed to issue and sell to DT, and DT has agreed to
purchase, $1.0 billion in aggregate principal amount of 4.000%
Senior Notes due 2022, $1.25 billion in aggregate principal
amount of 5.125% Senior Notes due 2025 and $1.25 billion in
aggregate principal amount of 5.375% Senior Notes due 2027 (the
New DT Notes) directly from T-Mobile USA. T-Mobile USA is not
required to pay any upfront fees, underwriting fees, new issuance
concession or
other consideration to DT in connection with the issuance and
sale of the New DT Notes. The closing of the issuance and sale of
$3.0 billion in aggregate principal amount of the New DT Notes to
DT is expected to occur on or about April28, 2017, and the
closing of the issuance and sale of the remaining $500.0 million
in aggregate principal amount of 5.375% Senior Notes due 2027 to
DT is expected to occur on or about September18, 2017. The New DT
Notes will have substantially the same terms and conditions as
each of the 2022 Notes, the 2025 Notes and the 2027 Notes, as
applicable, other than issue date, registration rights and CUSIP.
In addition, the New DT Notes will be issued under separate
supplemental indentures and will each constitute a separate
series from the Notes for all purposes, including voting;
provided that if T-Mobile USA exercises its rights in respect of
a series of Notes, T-Mobile USA will exercise the same rights in
respect of the New DT Notes of the corresponding series on an
equal and ratable basis.
The New DT Notes will be issued and sold to DT without being
registered under the Securities Act of 1933, as amended (the
Securities Act), in reliance upon an exemption therefrom. The
Company or T-Mobile USA will not be required to file a
registration statement with the Securities and Exchange
Commission (the SEC) providing for the registration under the
Securities Act of the New DT Notes prior to the date that is six
months after the respective issuance dates of the New DT Notes.
T-Mobile USA expects to use the net proceeds from issuance and
sale of the New DT Notes to refinance existing indebtedness,
including by exchanging all $1.25 billion in aggregate principal
amount of T-Mobile USAs 6.288% Senior Reset Notes due 2019 and
$1.25 billion in aggregate principal amount of T-Mobile USAs
6.366% Senior Reset Notes due 2020 held by DT for a portion of
the New DT Notes. T-Mobile USA expects to use the $1.0 billion of
cash proceeds from the issuance and sale of the New DT Notes,
along with the cash proceeds from the issuance and sale of $1.5
billion in aggregate principal amount of the Notes described
above, to redeem $1.25 billion in aggregate principal amount of
T-Mobile USAs 6.731% Senior Notes due 2022 and $1.25 billion in
aggregate principal amount of T-Mobile USAs 6.633% Senior Notes
due 2021.
DT is the Companys majority stockholder and a holder of a portion
of T-Mobile USAs outstanding debt, as further described in the
Companys periodic reports with the SEC.
This description of the Purchase Agreement is a summary only and
is qualified in its entirety by the full and complete terms of
the Purchase Agreement, which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and incorporated herein by reference.
Item2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The disclosure set forth under the caption Supplemental
Indentures; Public Notes Issuance in Item1.01 of this Current
Report on Form 8-K is also responsive to Item2.03 of this Current
Report on Form 8-K and is incorporated herein by reference.
Item8.01 Other Events.
On March13, 2017, T-Mobile USA and the Guarantors entered into an
underwriting agreement (the Underwriting Agreement) with the
several underwriters named in the Underwriting Agreement (the
Underwriters), for which Deutsche Bank Securities Inc. acted as
representative, relating to an underwritten public offering of
the Notes in an aggregate principal amount of $1,500,000,000. The
Notes were offered to the public at a price equal to 100.0% of
the principal amount thereof, and the Underwriters agreed to
purchase the Notes from T-Mobile USA to the Underwriting
Agreement at an aggregate price of $1,497,625,000.
The closing of the offering and delivery of the Notes took place
on March16, 2017. The Notes were issued to an automatic shelf
registration statement on Form S-3 (the Registration Statement)
that the Company and T-Mobile USA filed with the SEC on April25,
2016, as amended (File No.333-210920). A prospectus supplement
relating to the offering has been filed with the SEC.
This description of the Underwriting Agreement is a summary only
and is qualified in its entirety by the full and complete terms
of the Underwriting Agreement, which is filed as Exhibit 1.1 to
this Current Report on Form 8-K and incorporated herein by
reference.
The legal opinion and consent of Latham Watkins LLP relating to
the Notes is filed as Exhibit 5.1 to this Current Report on Form
8-K and incorporated herein by reference.
Item9.01 Financial Statements and Exhibits.
The following exhibits are provided as part of this Current
Report on Form 8-K: (d)Exhibits:
| Exhibit | Description | |
| 1.1 |
Underwriting Agreement, dated March 13, 2017, among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and the several Underwriters named in Schedule 1 thereto for which Deutsche Bank Securities Inc. acted as representative. |
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| 4.1 |
Twenty-Third Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.000% Senior Note due 2022. |
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| 4.2 |
Twenty-Fourth Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 5.125% Senior Note due 2025. |
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| 4.3 |
Twenty-Fifth Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 5.375% Senior Note due 2027. |
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| 5.1 | Opinion of Latham Watkins LLP | |
| 10.1 |
Purchase Agreement, dated as of March 13, 2017, among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Telekom AG. |
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| 23.1 | Consent of Latham Watkins LLP (included in Exhibit 5.1). |
T-MOBILE US, INC. (NASDAQ:TMUSP) Recent Trading Information
T-MOBILE US, INC. (NASDAQ:TMUSP) closed its last trading session down -0.94 at 101.60 with shares trading hands.