Sprint ups consent fee in bid to amend two series for T-Mobile merger

By Susanna Moon

Chicago, May 16 – Sprint Corp. said it amended the consent solicitation for the $2,475,000,000 of outstanding 6 7/8% notes due 2028 and $2 billion of 8¾% notes due 2032 issued by Sprint Capital Corp., a wholly owned finance subsidiary of Sprint Communications, Inc.

The aggregate consent payment will now be $99 million for the 6 7/8% notes and $80 million for the 8¾% notes, according to a company announcement.

Sprint was originally offering to pay holders who give their consents to the amendments a pro rata share of $49.5 million for the 6 7/8% notes and $40 million for the 8¾% notes if it secures the needed majority for that series.

Sprint Capital also accelerated the expiration of the solicitation to 5 p.m. ET on May 17 from 5 p.m. ET on May 18.

As a result of the amended payment, Sprint Capital said the change in yield will cause a deemed exchange of the notes for U.S. federal income tax purposes.

As announced May 14, the solicitation is being held in connection with Sprint's plans to merge with a wholly owned subsidiary of T-Mobile US, Inc. with Sprint expected to become a direct or indirect wholly owned subsidiary of T-Mobile.

Specifically, Sprint is soliciting consents from holders to amend the section of the indenture that put limitations on mortgages and liens of the guarantor to expressly provide that, despite the fact that none of the transferred portfolio of FCC licenses and third-party leased license agreements was transferred by SCI or any restricted subsidiary, the securitization completed in connection with the issue by securitization entities of wireless spectrum backed notes is not subject to section 1012 under the spectrum amendment; to add a restriction on consolidation, mergers and transfers of all or substantially all property and assets of T-Mobile USA; and to remove the restrictions on transfers of all or substantially all property and assets of Sprint Capital and Sprint Communications.

In addition, T-Mobile and T-Mobile USA will enter into a supplemental indenture to the notes to provide unconditional and irrevocable guarantees, regardless of whether the required consents are received.

The lead solicitation agent is J.P. Morgan Securities LLC (866 834-4666 or 212 834-3260). Deutsche Bank Securities Inc. is the co-solicitation agent. The information agent is Georgeson LLC (866 856-2826 or sprint@georgeson.com).

Bid for eight other series

As announced on May 7, Sprint Corp. was soliciting consents for eight series of its notes as part of the planned merger with T-Mobile until 5 p.m. ET on May 11.

After obtaining the needed consents, Sprint will execute the sixth supplemental indenture to each series of Sprint notes, which will become operative immediately before the closing of the T-Mobile deal, according to a separate company press release.

In addition, Sprint’s subsidiary Sprint Communications was soliciting consents for its $1.5 billion of 11½% senior notes due 2021, $1 billion of 7% senior notes due 2020 and $2.28 billion of 6% senior notes due 2022.

Sprint was seeking to amend the definition of “change of control” in the note indentures to exclude the transaction with T-Mobile and to amend the definition of “permitted holder” to include SoftBank, T-Mobile, Deutsche Telekom and their affiliates and successors and certain groups of which they are members.

The notes covered by the solicitation are Sprint’s $2.25 billion of 7¼% notes due 2021, $4.25 billion of 7 7/8% notes due 2023, $2.5 billion of 7 1/8% notes due 2024, $1.5 billion of 7 5/8% notes due 2025 and $1.5 billion of 7 5/8% notes due 2026.

Sprint obtained consents for 94.1539% of the 2021 notes, 98.1502% of the 2023 notes, 96.3092% of the 2024 notes, 97.2857% of the 2025 notes and 98.4623% of 2026 notes.

The consent fees for each $1,000 principal amount will be $1.33 for the 2021 notes, $2.55 for the 2023 notes, $2.60 for the 2024 notes, $2.57 for the 2025 notes and $2.54 for the 2026 notes.

Sprint Communications secured consents for 91.2677% of the 2020 notes, 98.5449% of the 2021 notes and 89.6543% of the 2022 notes.

For these issues, the consent fees per $1,000 principal amount will be $1.37 for the 2020 notes, $1.27 for the 2020 notes and $2.79 for the 2020 notes.

Sprint was also seeking to add a restriction on consolidations, mergers and transfers of all or substantially all property and assets of T-Mobile USA and to remove the restriction on transfers of all or substantially all property and assets of Sprint.

In addition, on the closing of the transaction with T-Mobile, T-Mobile and T-Mobile USA will guarantee the Sprint notes, whether or not the consents are received.

Sprint said that under the note indenture the occurrence of a change of control and a ratings decline will constitute a change-of-control triggering event requiring Sprint to offer to repurchase the notes at 101% of par plus accrued interest.

The proposed amendments will remove the requirement to make a change-of-control offer.

Sprint was offering to pay aggregate consent payments, to be divided equally among consenting noteholders, of $2,812,500 for its 2021 notes, $10,625,000 for its 2023 notes, $6.25 million for its 2024 notes, $3.75 million for its 2025 notes and $3.75 million for its 2026 notes.

For the Sprint Communications notes, Sprint is offering an aggregate consent payment of $1,875,000 for the 2020 notes, $1.25 million for the 2021 notes and $5.7 million for the 2022 notes.

Once the necessary consents are received, Sprint plans to execute a supplemental indenture, but it will not become operative until immediately before the completion of the transaction with T-Mobile.

J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811) is lead solicitation agent and Deutsche Bank Securities Inc. is co-solicitation agent. Georgeson Inc. (866 856-2826, 212 440-9800 or sprint@georgeson.com) is information agent.

Sprint is an Overland Park, Kan., telecommunications company.

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