TELEPHONE AND DATA SYSTEMS,INC. (NYSE:TDE) Files An 8-K Entry into a Material Definitive Agreement

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TELEPHONE AND DATA SYSTEMS,INC. (NYSE:TDE) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement

TDS Revolving Credit Agreement:

This Current Report on Form8-K is being filed to disclose that, on May10, 2018 (the “Effective Date”), Telephone and Data Systems,Inc. (“TDS” or the “Company”) entered into a $400,000,000 Credit Agreement by and among TDS as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders party thereto and identified therein (“Revolving Credit Agreement”).

The Revolving Credit Agreement provides TDS with a $400,000,000 senior revolving credit facility for general corporate purposes, including working capital, non-hostile acquisitions, spectrum purchases and capital expenditures.

The following briefly describes the terms of the Revolving Credit Agreement:

Borrowings under the Revolving Credit Agreement bear interest, at TDS’s option, either at a LIBOR rate or at an alternative base rate, plus an applicable margin. TDS’s interest costs under the Revolving Credit Agreement are based on credit ratings from Standard& Poor’s Rating Services, Moody’s Investor Services or Fitch Ratings. If TDS’s credit ratings were lowered, the credit facility would not cease to be available solely as a result of a decline in its credit ratings.

The two financial covenants described below are included in the Revolving Credit Agreement:

1. Consolidated Interest Coverage Ratio (the ratio of Consolidated EBITDA to Consolidated Interest Charges), may not be less than 3.00 to 1 as of the end of any fiscal quarter.

2. Consolidated Leverage Ratio (the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA) may not be greater than the ratios indicated for each period specified below:

Period

Ratios

From the Effective Date through June30, 2019

3.25 to 1.00

From July1, 2019 and thereafter

3.00 to 1.00

The Revolving Credit Agreement will be unsecured.

The Revolving Credit Agreement provides, among other things, that TDS may not, and may not cause or permit any of its subsidiaries to sell, or incur or permit to exist any liens on, any property or assets now owned or hereafter acquired by TDS or by any such subsidiary, make investments, effect mergers or other fundamental changes, make dividends, distributions or other restricted payments, or enter into transactions with affiliates, other than as expressly excepted in the Revolving Credit Agreement.

The Revolving Credit Agreement includes representations and warranties, covenants, events of default and other terms and conditions that are substantially similar to TDS’s existing revolving credit agreement.

A Change in Control, as such term is defined in the Revolving Credit Agreement, of TDS would constitute a default and would require all borrowings outstanding under the Revolving Credit Agreement to be repaid.

The continued availability of the Revolving Credit Agreement requires TDS to comply with certain negative and affirmative covenants, maintain the above financial ratios and provide representations on certain matters at the time of each borrowing.

Amounts under the Revolving Credit Agreement may be borrowed, repaid and reborrowed from time to time from and after the Effective Date until the maturity date. There are no outstanding borrowings under the Revolving Credit Agreement as of the Effective Date, except for letters of credit.

Amounts borrowed under the Revolving Credit Agreement will be due and payable in full on the fifth anniversary of the Effective Date.

The foregoing brief description is qualified by reference to the copy of the Revolving Credit Agreement attached hereto as Exhibit4.1, which is incorporated herein by reference, and which identifies the lenders thereto.

Some of the lenders and/or agents under the Revolving Credit Agreement and/or their affiliates may have various relationships with TDS, its publicly-traded subsidiary, United States Cellular Corporation (“U.S. Cellular”), and their subsidiaries, involving banking or other financial services, including checking, cash management, brokerage, lending, investment banking, depository, indenture trustee and/or other services, including serving as a lender under Revolving Credit Agreement or other TDS and/or U.S. Cellular credit agreements.

TDS’s first tier, wholly-owned subsidiaries (other than Suttle Straus,Inc.) have jointly and severally unconditionally guaranteed the payment and performance of the obligations of TDS under the Revolving Credit Agreement to a Guaranty dated the Effective Date. The form of the Guaranty is attached as an exhibit to the Revolving Credit Agreement attached hereto as Exhibit4.1. Other subsidiaries that meet certain criteria will be required to provide a similar Guaranty in the future.

U.S. Cellular Revolving Credit Agreement and Term Loan Agreement:

Also, on May10, 2018, U.S. Cellular, entered into a $300,000,000 Credit Agreement (“U.S. Cellular Revolving Credit Agreement”), as disclosed in U.S. Cellular’s Form8-K dated May10, 2018, which Form8-K is incorporated by reference herein. The terms and conditions of the U.S. Cellular Revolving Credit Agreement are described in such Form8-K and are substantially similar to those of TDS’ Revolving Credit Agreement. A copy of the U.S. Cellular Revolving Credit Agreement, including the forms of the related Guaranty and Subordination Agreement attached thereto, is incorporated by reference herein as Exhibit4.2.

In connection with the U.S. Cellular Revolving Credit Agreement, U.S. Cellular entered into an amendment dated May10, 2018 to its Amended and Restated Credit Agreement dated June15, 2016 (the “Term Loan Agreement”), in order to conform the Term Loan Agreement with the U.S. Cellular Revolving Credit Agreement. A copy of this amendment is incorporated by reference herein as Exhibit4.3.

In reviewing the agreements included as exhibits to this report, please note that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. Certain of the agreements contain representations and warranties by one or more of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

· may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

· were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in the Company’s SEC filings, which are available without charge through the SEC’s website at http://www.sec.gov.

Item 1.02. Termination of a Material Definitive Agreement

In connection with and as a condition of entering into the Revolving Credit Agreement, on the Effective Date, TDS terminated its prior $400,000,000 Credit Agreement by and among TDS as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and the lenders party thereto, dated as of June15, 2016, except with respect to outstanding letters of credit. TDS did not incur any early termination penalties in connection with the termination. A description of such prior Credit Agreement and a description of any material relationships between TDS and its affiliates and any of the other parties to the prior Credit Agreement are included in TDS’s Form8-K dated June15, 2016, and are incorporated by reference herein.

Also, on May10, 2018, U.S. Cellular terminated its Revolving Credit Agreement dated June15, 2016, except with respect to outstanding letters of credit, as disclosed in U.S. Cellular’s Form8-K dated May10, 2018, which is incorporated by reference herein.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The disclosure set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

ExhibitNumber

DescriptionofExhibits

4.1

Revolving Credit Agreement, among TDS, Wells Fargo National Association, as administrative agent, and the other lenders thereto, dated as of May10, 2018, including Schedules and Exhibits, including the form of subsidiary Guaranty

4.2

Revolving Credit Agreement, among U.S. Cellular, Toronto Dominion (Texas) LLC, as administrative agent, and the other lenders thereto, dated as of May10, 2018, including Schedules and Exhibits, including the form of subsidiary Guaranty and Subordination Agreement, is hereby incorporated by reference from U.S. Cellular’s Form8-K dated May10, 2018

4.3

First Amendment to Amended and Restated Credit Agreement, among U.S. Cellular, CoBank, ACB, as administrative agent, and the other lenders thereto, dated as of May10, 2018, is hereby incorporated by reference from U.S. Cellular’s Form8-K dated May10, 2018


TELEPHONE & DATA SYSTEMS INC /DE/ Exhibit
EX-4.1 2 a18-13425_1ex4d1.htm EX-4.1 EXHIBIT 4.1       Published CUSIP Number: [▲]   $400,…
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