Item 1.01 Entry into a Material Definitive Agreement.
On March 21, 2018 (the “
Closing Date
”), Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC and Sprint Spectrum Co
III LLC (together, the “
Issuers
”), each a Delaware limited liability company and limited-purpose, bankruptcy remote, wholly owned indirect subsidiary of Sprint Corporation (the “
Company
”) completed the
previously announced issuance of $3,937,500,000 aggregate principal amount of wireless spectrum-backed notes, consisting of $2,100,000,000 in aggregate principal amount of Series
2018-1
4.738% Senior Secured
Notes,
Class A-1
(the “
A-1
Notes
”), and $1,837,500,000 in aggregate principal amount of Series
2018-1
5.152% Senior Secured Notes,
Class A-2
(the “
A-2
Notes
” and, together with the
A-1
Notes, the “
2018
Notes
”), in a private transaction exempt from the registration requirements of the Securities Act of 1933 (the “
Securities
Act
”). The 2018 Notes are eligible for resale pursuant to Rule 144A and Regulation S under the Securities Act.
The 2018
Notes were issued under a base indenture, dated as of October 27, 2016, by and among the Issuers and Deutsche Bank Trust Company Americas, as trustee and securities intermediary (the “
Trustee
”), as amended by the first
supplemental indenture, dated as of March 12, 2018, by and among the Issuers and the Trustee (as so amended, the “
Base Indenture
”), and as supplemented by the Series
2018-1
Supplement, dated as March 21, 2018 (the “
2018-1 Supplement
” and, together with the Base Indenture, the “
Indenture
”), by and among the
Issuers and the Trustee. The Base Indenture allows the Issuers to issue additional series of notes in the future subject to certain conditions set forth therein.
The 2018 Notes were issued as part of a securitization program. In 2016, in connection with the issuance by the Issuers of the first series of
notes under this securitization program (the “
2016 Notes
”), the Issuers’ directly owned, limited-purpose, bankruptcy remote subsidiaries (collectively, the “
License Holders
”) acquired a portfolio
of FCC licenses and a small number of third-party leased license agreements (the “
Spectrum Portfolio
”) from subsidiaries of Sprint Communications, Inc. (“
SCI
”), which comprise a portion of the
Company’s 2.5GHz and 1.9GHz spectrum holdings, representing approximately 14 percent of the Company’s total spectrum holdings on a MHz-pops basis. The current Spectrum Portfolio is substantially identical to the original portfolio
from 2016. The Spectrum Portfolio has been leased to SCI pursuant to a long-term lease agreement, the rental payments for which service the 2018 Notes and the 2016 Notes. SCI’s lease payment obligations are guaranteed by the Company and the
subsidiaries of SCI that provide guarantees under SCI’s existing credit agreements with JPMorgan Chase Bank, N.A. and the other lenders party thereto and with Export Bank Canada. Such lease payment guarantees (together with each such
party’s guaranty obligations under an additional transaction agreement) are secured equally and ratably with such party’s obligations under the above-referenced credit agreements, by substantially all of the assets, subject
to certain exceptions, of the Company and such guarantor subsidiaries of SCI in an aggregate amount of up to $3.5 billion. None of such lease payment guarantor subsidiaries of SCI were “Restricted Subsidiaries” (as defined under
certain of SCI’s indentures) of SCI at the time of pledge of such collateral.
Payments of interest and amortizing principal, as
applicable, are required to be made on the 2018 Notes on the 20th day of each March, June, September and December or, if such day is not a business day, the next succeeding business day, commencing on June 20, 2018.
The A-1 Notes
provide for an interest-only period followed by quarterly principal amortization payments beginning on June 20, 2021. The
A-2
Notes provide for an
interest-only period followed by quarterly principal amortization payments beginning on June 20, 2023. Both tranches of the 2018 Notes have a legal final maturity date of September 20, 2029; however the
A-1
Notes are anticipated to be repaid by March 20, 2025 and the
A-2
Notes are anticipated to be repaid by March 20, 2028.
The 2018 Notes are (a) guaranteed by (i) Sprint Spectrum PledgeCo LLC, Sprint Spectrum PledgeCo II LLC and Sprint Spectrum PledgeCo
III LLC, each a wholly owned indirect, limited-purpose, bankruptcy remote subsidiary of the Company and direct parent of an Issuer and (ii) each of the License Holders (collectively, the “
Guarantors
”) pursuant to the
Guarantee and Collateral Agreement, dated as of October 27, 2016, and (b) are secured by a pledge of the Spectrum Lease, the proceeds of the Spectrum Portfolio and the equity interests in the Issuers and the License Holders. The collateral
for the 2018 Notes is shared equally and ratably with the 2016 Notes. None of the Company, SCI or any of their affiliates other than the Issuers and the Guarantors are obligors under on the 2018 Notes. Except through their rights under the Spectrum
Lease and their ownership interests in the Issuers and the Guarantors, the Spectrum Portfolio is not available to the Company, SCI or any of their affiliates (other than the Issuers and the Guarantors), or their respective creditors.
Also on the Closing Date, the Issuers and the Trustee entered into the First Supplemental Indenture (the “
Series 2016 Supplemental
Indenture
”) to the Series
2016-1
Supplement, dated as of October 27, 2016, by and among the Issuers and the Trustee (the “
2016-1
Supplement
”), to the Base Indenture. The Series 2016 Supplemental Indenture makes certain technical and conforming changes to the
2016-1
Supplement, which, as so amended, is substantially similar
to the
2018-1
Supplement.
2
The preceding description of the
2018-1
Supplement and
the Series 2016 Supplemental Indenture is a summary and is qualified in its entirety by the
2018-1
Supplement and the Series 2016 Supplemental Indenture, each of which is filed as an exhibit hereto and
incorporated by reference herein.