Item 1.01.
Entry into a Material Definitive Agreement.
Brazil Credit Agreement Amendments and Waiver of Covenants
On February 24, 2017, Nextel Brazil entered into amendments to its credit agreements with each of Caixa Econômica Federal and Banco do Brasil, S.A. (together, the “Amendments”) for an amendment fee of 3.7 million Brazilian reais, or about $1.2 million based on the exchange rate in effect on February 24, 2017.
The Amendments provide, among other things, that effective March 2, 2017, no amortization payments will be required with respect to the loan with Caixa Econômica Federal until July 8, 2017 and with respect to Banco do Brasil until July 31, 2017 (the “Standstill Period”), at which time Nextel Brazil will have to make a principal payment in the amount of the foregone amortization; provided, however, that if certain events occur during the Standstill Period, including Nextel Brazil’s early repayment of other debt obligations, reinforcement or alteration of personal guarantees with respect to other debt, or execution of agreements with terms and conditions more favorable to other creditors than to Caixa Econômica Federal or Banco do Brasil, respectively, and Nextel Brazil does not remedy such events within a certain period of time, a mandatory early payment in the applicable amount described in the Amendments will be triggered. The Amendments also provide Nextel Brazil with the ability to grant as guarantees in the ordinary course of business to creditors other than financial institutions up to Brazilian reais 5 million, and to grant judicial guarantees and judicial deposits up to Brazilian reais 310 million, with certain exceptions and limitations.
Concurrently, on February 24, 2017, Nextel Brazil obtained waivers of certain covenants from each of Caixa Econômica Federal and Banco do Brasil (together, the “Waivers”). The Waivers provide for a waiver of non-compliance with respect to the net debt financial covenant and certain other covenants of the relevant credit agreements as of December 31, 2016. The Waivers also provide for a “covenant holiday” inclusive of the June 30, 2017 testing period, during which time no compliance will be required with respect to the net debt financial covenant. Additionally, in connection with the Waivers, the parties have agreed to take commercially reasonable efforts to negotiate long-term modifications of the financing arrangements during the applicable Standstill Period.
The description of the Amendments and the Waivers contained in this Form 8-K is qualified in its entirety by reference to the complete text of the Amendments and the Waivers. Copies of English translations of the Amendments and the Waivers are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to this report, respectively, and incorporated herein by reference.
Nextel Brazil’s credit agreements with Caixa Econômica Federal and Banco do Brasil, including amendments thereto, are attached as Exhibits 99.5 and 99.5 to the Annual Report on Form 10-K filed on February 28, 2014, and Exhibits 10.6, 10.7, 10.8 and 10.9 to the Current Report on Form 8-K filed June 30, 2015, and incorporated herein by reference.