Item 1.01 Entry into a Material Definitive Agreement.
Amended and Restated Stockholders' Agreement
Pursuant to the Business Combination Agreement, on April 1, 2020, T-Mobile,
Deutsche Telekom and SoftBank entered into an amendment and restatement (the
"Amended and Restated Stockholders' Agreement") of the Stockholder's Agreement,
dated as of April 30, 2013, by and between T-Mobile and Deutsche Telekom.
The Amended and Restated Stockholders' Agreement includes provisions setting
forth the rights of Deutsche Telekom and SoftBank to designate individuals to be
nominees for election to T-Mobile's board of directors (the "Board") and any
committees thereof. Pursuant to the Amended and Restated Stockholders'
Agreement, at all times when Deutsche Telekom and SoftBank beneficially own at
least 50% of the outstanding T-Mobile Common Stock and any other securities of
T-Mobile that are entitled to vote in the election of directors (collectively,
"T-Mobile Voting Securities") in the aggregate and any such T-Mobile Voting
Security continues to be subject to the Proxy (as defined below), (i) the Board
will consist of a total of 14 directors, (ii) each of Deutsche Telekom and
SoftBank (except, in the case of SoftBank, if it beneficially owns less than a
certain minimum percentage of the outstanding T-Mobile Voting Securities (10% if
the condition giving rise to SoftBank's right to the Additional Shares has been
satisfied, or 9% if it has not)) has the right to designate a specified number
of nominees for election to the Board in accordance with the terms of the
Amended and Restated Stockholders' Agreement, subject to certain requirements,
including requirements with respect to the "independence" of certain nominees
under applicable stock exchange listing standards and rules of the SEC,
(iii) the chairperson of the Board will be a Deutsche Telekom designee and
(iv) the Board will have certain committees, which committees will be comprised
in the manner specified in the Amended and Restated Stockholders' Agreement. The
Amended and Restated Stockholders' Agreement further provides that at all times
when Deutsche Telekom and SoftBank beneficially own less than 50% of the
outstanding T-Mobile Voting Securities in the aggregate or no T-Mobile Voting
Security continues to be subject to the Proxy, then, in each case, each of
Deutsche Telekom and SoftBank has the right to designate a number of nominees
for election to the Board equal to the percentage of T-Mobile Voting Stock that
it beneficially owns (provided that such percentage is 10% or more) multiplied
by the number of directors on the Board, rounded to the nearest whole number
greater than zero.
Based on the percentages of T-Mobile Common Stock beneficially owned by Deutsche
Telekom and SoftBank as of immediately following the Merger Transactions and
after giving effect to the SoftBank Disposition, under the Amended and Restated
Stockholders' Agreement, Deutsche Telekom has the right to designate nine
individuals to be nominees for election to the Board and SoftBank has the right
to designate four individuals to be nominees for election to the Board.
In accordance with the terms of the Business Combination Agreement and the
. . .
Item 1.02 Termination of a Material Definitive Agreement.
Existing Deutsche Telekom Credit Facilities
On the Closing Date, in connection with the Merger Transactions and pursuant to
the Financing Matters Agreement, dated as of April 29, 2018 (the "Financing
Matters Agreement"), by and between T-Mobile USA and Deutsche Telekom, T-Mobile
USA repaid all outstanding amounts owed under, and terminated, T-Mobile USA's
existing $4.0 billion Term Loan Credit Agreement, dated as of November 9, 2015
and as amended from time to time, by and among T-Mobile USA, as borrower,
T-Mobile, as a guarantor, the subsidiary guarantors party thereto, Deutsche Bank
AG New York Branch ("DB"), as administrative agent, and Deutsche Telekom, as
lender. Further, on the Closing Date, pursuant to the Financing Matters
Agreement, T-Mobile USA terminated (i) T-Mobile USA's existing Secured Revolving
Credit Agreement, dated as of December 29, 2016 and as amended from time to
time, by and among T-Mobile USA, as borrower, T-Mobile, as a guarantor, the
subsidiary guarantors party thereto and Deutsche Telekom, as administrative
agent and lender, and (ii) T-Mobile USA's existing Unsecured Revolving Credit
Agreement, dated as of December 29, 2016 and as amended from time to time, by
and among T-Mobile USA, as borrower, T-Mobile, as a guarantor, the subsidiary
guarantors party thereto and Deutsche Telekom, as administrative agent and
lender.
Notes held by Deutsche Telekom
On the Closing Date, in connection with the Merger Transactions and pursuant to
the Financing Matters Agreement, T-Mobile USA purchased from Deutsche Telekom
the outstanding $2,000,000,000 in aggregate principal amount of T-Mobile USA's
5.300% Senior Notes due 2021 and the outstanding $2,000,000,000 in aggregate
principal amount of T-Mobile USA's 6.000% Senior Notes due 2024, in each case at
a price equal to par plus accrued and unpaid interest on such notes to, but not
including, the Closing Date.
As disclosed in T-Mobile's Current Report on Form 8-K filed on December 21,
2018, amendments to the Indenture, dated as of April 28, 2013 (as amended and
supplemented, the "Indenture"), by and among T-Mobile USA, the guarantors party
thereto and Deutsche Bank Trust Company Americas, governing certain other
T-Mobile USA notes held by Deutsche Telekom, became effective immediately prior
to the completion of the Merger Transactions. These amendments pertain to
T-Mobile USA's 4.000% Senior Notes due 2022-1, 5.125% Senior Notes due 2025-1,
5.375% Senior Notes due 2027-1, 4.500% Senior Notes due 2026-1 and 4.750% Senior
Notes due 2028-1 (collectively, the "DT Notes"). These amendments, among other
things, amend the Indenture (i) pertaining to all DT Notes to allow certain
entities related to Sprint's existing spectrum securitization notes program (the
"Sprint Spectrum Note Facility") to be non-guarantor restricted subsidiaries
under the Indenture, provided that the aggregate principal amount of the notes
issued and outstanding under the Sprint Spectrum Note Facility does not exceed
$7.0 billion and provided that the principal amount of such notes shall reduce
the amount available under the ratio basket with respect to Credit Facilities
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets.
The information set forth in the Introduction regarding the acquisition of the
equity interests of Sprint is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
New Credit Agreement
On the Closing Date, T-Mobile USA entered into a Credit Agreement (the "New
Credit Agreement") by and among T-Mobile USA, as borrower, DB, as administrative
agent, and the lenders and other financial institutions party thereto, providing
for a $4.0 billion term loan facility (the "New Term Loan Facility") and a
$4.0 billion revolving credit facility (the "New Revolving Credit Facility").
The loans under the New Term Loan Facility mature on April 1, 2027. The loans
under the New Term Loan Facility are payable in quarterly installments of 0.25%
of the sum of the aggregate amount of the term loans outstanding thereunder on
the Closing Date, with the remaining balance due at maturity, except as
otherwise extended or replaced. The loans under the New Term Loan Facility may
be prepaid by T-Mobile USA at any time without penalty or premium, subject to
customary LIBOR breakage provisions and a soft call prepayment premium of 1.00%
of the outstanding principal amount of the loans under the New Term Loan
Facility payable upon the refinancings of certain loans by T-Mobile USA with
lower priced debt prior to October 1, 2020, subject to customary exclusions.
Commitments under the New Revolving Credit Facility will mature on April 1,
2025, except as otherwise extended or replaced. T-Mobile USA may repay amounts
borrowed, reborrow and/or terminate the commitments under the New Revolving
Credit Facility (in whole or part) at any time without premium or penalty.
The rates of interest on amounts borrowed under the Term Loan Facility are based
on, at T-Mobile USA's option, either LIBOR (subject to a 0% LIBOR floor) plus a
margin of 3.00% or an alternate base rate plus a margin of 2.00%, and amounts
borrowed under the Revolving Credit Facility are based on, at T-Mobile USA's
option, either LIBOR (subject to a 0% LIBOR floor)
--------------------------------------------------------------------------------
plus a margin of 1.25% or an alternate base rate plus a margin of 0.25%, with
the margins subject to reduction to 1.00% and 0.00%, respectively, if T-Mobile's
Total First Lien Net Leverage Ratio (as defined in the New Credit Agreement) is
less than or equal to 0.75 to 1.00. The alternate base rate is the highest of
(i) the prime rate of the administrative agent, (ii) the federal funds effective
rate plus 0.50% and (iii) one-month adjusted LIBOR plus 1.00%. In the event that
LIBOR becomes unascertainable, is no longer made available or a public
announcement has been made that it will no longer be available or syndicated
loans are being executed or amended to incorporate or adopt a new benchmark to
replace LIBOR, then T-Mobile USA and the administrative agent are permitted to
amend the New Credit Agreement to replace LIBOR with an alternative benchmark
rate.
The commitment fee for the New Revolving Credit Facility is 0.375% per annum,
subject to reduction to 0.25% if T-Mobile's Total First Lien Net Leverage Ratio
is less than or equal to 0.75 to 1.00 and an increase to 0.50% if T-Mobile's
Total First Lien Net Leverage Ratio is greater than 1.25 to 1.00, in each case
determined on a Pro Forma Basis (as defined in the New Credit Agreement) as of
the last day of the most recently ended Test Period (as defined in the New
Credit Agreement).
T-Mobile USA's obligations under the New Credit Agreement are guaranteed by
T-Mobile and by all of T-Mobile USA's wholly-owned domestic restricted
subsidiaries (other than certain excluded subsidiaries including certain
designated special purpose finance vehicle entities, insurance subsidiaries and
. . .
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in Item 1.01 relating to the Amended and Restated
Stockholders' Agreement and the information set forth in Item 5.03 relating to
the Restated Certificate and the Restated Bylaws is incorporated herein by
reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Board of Directors and CEO Transition
On March 26, 2020, the Board approved certain actions with respect to the
composition of the Board and its committees. In accordance with the terms of the
Business Combination Agreement and the Amended and Restated Stockholders'
Agreement, as modified by certain transitional arrangements agreed to between
the parties as described below, the size of the Board as of immediately
following the Effective Time was increased to consist of a total of 14
directors, including nine directors designated by Deutsche Telekom, three
directors designated by SoftBank, and each of John J. Legere and G. Michael
Sievert.
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Resignation of Director
On March 26, 2020, in connection with the transactions contemplated by the
Business Combination Agreement, Bruno Jacobfeuerborn submitted his resignation
from his position as a director of T-Mobile, effective as of the Effective Time.
Continued Service of Directors; Election of Directors
The nine directors designated by Deutsche Telekom pursuant to the Business
Combination Agreement and the Amended and Restated Stockholders' Agreement, each
of whom previously served, and continues to serve, as a member of the Board,
effective from and after the Effective Time are as follows: Timotheus Höttges
(as Chairperson), Srikant Madhav Datar, Srini Gopalan, Lawrence H. Guffey,
Dr. Christian P. Illek, Raphael Kübler, Thorsten Langheim, Teresa A. Taylor and
Kelvin R. Westbrook. Each of Mr. Datar, Mr. Guffey, Ms. Taylor and Mr. Westbrook
is an independent director under the listing standards of NASDAQ.
The three directors designated by SoftBank pursuant to the Business Combination
Agreement and the Amended and Restated Stockholders' Agreement, each of whom was
appointed by the Board to fill the vacancies resulting from the resignation of
the individual referred to above and the increase in the size of the Board
referred to above, in each case effective from and after the Effective Time, are
as follows: Marcelo Claure, Stephen Kappes and Ronald Fisher. Mr. Claure
currently serves as Executive Vice President and Chief Operating Officer of
SoftBank. He formerly served as Executive Chairman of Sprint. Mr. Fisher
currently serves as Vice Chairman of the board of directors of SoftBank. He
formerly served as Vice Chairman of the board of directors of Sprint. Mr. Kappes
also previously served as a director of Sprint. It is anticipated that one
additional director will be designated by SoftBank, and appointed by the Board,
following the Closing, such that, effective from and after such time, SoftBank
will have four designees on the Board, in accordance with the terms of the
Amended and Restated Stockholders' Agreement. Each of Mr. Kappes and the
director to be designated by SoftBank following the Closing is (or will be, as
applicable) an independent director under the listing standards of NASDAQ.
CEO Transition
As described below, the Board has named Mr. Sievert to succeed Mr. Legere as
Chief Executive Officer of T-Mobile effective as of immediately following the
Closing. In connection with the foregoing transition, the parties to the
Business Combination Agreement have entered into a waiver pursuant to which
Mr. Legere will continue to serve as a member of the Board from and after the
Effective Time until the date of T-Mobile's 2020 annual meeting of stockholders.
From and after such date, in accordance with the terms of the Business
Combination Agreement and the Amended and Restated Stockholders' Agreement, the
Board will consist of a total of 14 directors, including nine directors
designated by Deutsche Telekom, four directors designated by SoftBank and the
Chief Executive Officer of T-Mobile.
Board Committees
In accordance with the terms of the Business Combination Agreement and the
Amended and Restated Stockholders' Agreement, the Board established a CEO
Selection Committee and a Transaction Committee, and appointed directors to
serve on each such committee and its other standing committees, in each case
effective as of the Effective Time, as follows:
• Audit Committee: Srikant Madhav Datar (Chair), Teresa A. Taylor and Kelvin
R. Westbrook
--------------------------------------------------------------------------------
• Compensation Committee: Kelvin R. Westbrook (Chair), Christian P. Illek,
Raphael Kübler, Thorsten Langheim and Marcelo Claure
. . .
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
In connection with the completion of the Merger Transactions, T-Mobile amended
and restated its certificate of incorporation in the form of the Fifth Amended
and Restated Certificate of Incorporation (the "Restated Certificate"),
effective as of the Effective Time. The Restated Certificate effects certain
changes to T-Mobile's precedent certificate of incorporation, including the
following:
• Authorized Capital Stock. Pursuant to the Restated Certificate, the
authorized capital stock of T-Mobile consists of 2,000,000,000 shares of
T-Mobile Common Stock and 100,000,000 shares of preferred stock, par value
$0.00001 per share.
• Board Representation. The Restated Certificate provides each of Deutsche
Telekom and SoftBank with the board and committee representation rights
described in Item 1.01.
• Approval Rights. The Restated Certificate provides each of Deutsche
Telekom and SoftBank with the approval rights described in Item 1.01.
--------------------------------------------------------------------------------
The information set forth in Item 1.01 is incorporated herein by reference.
In addition, in connection with the completion of the Merger Transactions,
T-Mobile amended and restated its bylaws in the form of the Seventh Amended and
Bylaws (the "Restated Bylaws"), effective as of the Effective Time. Among other
things, the Restated Bylaws include certain modifications to the procedures
related to director nominations and other business proposed to be brought before
stockholder meetings.
The foregoing summary of the Restated Certificate and the Restated Bylaws does
not purport to be complete and is subject to, and qualified in its entirety by,
the Restated Certificate, a copy of which is attached hereto as Exhibit 3.1, and
the Restated Bylaws, a copy of which is attached hereto as Exhibit 3.2.
Item 7.01 Regulation FD Disclosure.
In connection with the completion of the Merger Transactions, T-Mobile has
determined that it is appropriate to withdraw its previously provided fiscal
year 2020 guidance for T-Mobile operating on a standalone basis. Given the
completion of the Merger Transactions and uncertainties with respect to the
duration, severity and scope of the coronavirus (COVID-19) pandemic, government
responses to the pandemic and the impact of the foregoing on the combined
company, T-Mobile will provide more information about its views regarding the
business outlook for the combined company at a later date.
On the Closing Date, T-Mobile issued a press release announcing the completion
of the Merger Transactions. A copy of the press release is attached hereto as
Exhibit 99.1.
The foregoing information in Item 7.01 of this Current Report on Form 8-K,
together with the press release attached hereto as Exhibit 99.1, is being
furnished pursuant to Item 7.01 and shall not be deemed "filed" for purposes of
Section 18 of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, and it shall not
be deemed incorporated by reference in any filing under the Securities Act or
the Exchange Act, whether made before or after the date hereof, except as
expressly set forth by specific reference in such filing to Item 7.01 of this
Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits
Financial Statement of Businesses Acquired and Pro Forma Financial Information
The audited financial statements required by Item 9.01(a) of Form 8-K, and the
unaudited pro forma condensed combined financial statements and notes related
thereto required by Item 9.01(b) of Form 8-K, are not included in this Current
Report on Form 8-K. The financial statements and pro forma condensed combined
financial statements will be filed by an amendment to this Current Report on
Form 8-K within the time period specified in the instructions to Item 9.01 of
Form 8-K.
(d) Exhibits.
Exhibit
No. Description
2.1 Business Combination Agreement, dated as of April 29, 2018, by and
among T-Mobile US, Inc., Huron Merger Sub LLC, Superior Merger Sub
Corporation, Sprint Corporation, Starburst I, Inc., Galaxy
Investment Holdings, Inc., and for the limited purposes set forth
therein, Deutsche Telekom AG, Deutsche Telekom Holding B.V., and
SoftBank Group Corp. (incorporated by reference to Exhibit 2.1 to
T-Mobile's Current Report on Form 8-K filed with the SEC on
April 30, 2018).
--------------------------------------------------------------------------------
Exhibit
No. Description
2.2 Amendment No. 1, dated as of July 26, 2019, to the Business
Combination Agreement, dated as of April 29, 2018, by and among and
among T-Mobile US, Inc., Huron Merger Sub LLC, Superior Merger Sub
Corp., Sprint Corporation, Starburst I, Inc., Galaxy Investment
Holdings, Inc., and for the limited purposes set forth therein,
Deutsche Telekom AG, Deutsche Telekom Holding B.V., and SoftBank
Group Corp. (incorporated by reference to Exhibit 2.2 to T-Mobile's
Current Report on Form 8-K filed with the SEC on July 26, 2019).
2.3 Amendment No. 2, dated as of February 20, 2020, to the Business
Combination Agreement, dated as of April 29, 2018, by and among
T-Mobile US, Inc., Huron Merger Sub LLC, Superior Merger Sub
Corporation, Sprint Corporation, Starburst I, Inc., Galaxy
Investment Holdings, Inc., and for the limited purposes set forth
therein, Deutsche Telekom AG, Deutsche Telekom Holding B.V., and
SoftBank Group Corp., as amended (incorporated by reference to
Exhibit 2.1 to T-Mobile's Current Report on Form 8-K filed with the
SEC on February 20, 2020).
3.1 Fifth Amended and Restated Certificate of Incorporation of
T-Mobile US, Inc.
3.2 Seventh Amended and Restated Bylaws of T-Mobile US, Inc.
10.1 Letter Agreement, dated as of February 20, 2020, by and among
T-Mobile US, Inc., Deutsche Telekom AG and SoftBank Group Corp.
(incorporated by reference to Exhibit 10.1 to T-Mobile's Current
Report on Form 8-K filed with the SEC on February 20, 2020).
10.2 Stockholders' Agreement, dated as of April 1, 2020, by and among
T-Mobile US, Inc., Deutsche Telekom AG and SoftBank Group Corp.
10.3 Amendment No. 1, dated as of April 1, 2020, to the License
Agreement, dated as of April 30, 2013, by and between T-Mobile US,
Inc. and Deutsche Telekom AG.
99.1 Press Release, dated April 1, 2020.
104 Cover Page Interactive Data File (the cover page XBRL tags are
embedded within the Inline XBRL document).
Cautionary Statement Regarding Forward-Looking Statements
This communication contains certain forward-looking statements concerning
T-Mobile, Sprint and the proposed transaction between T-Mobile and Sprint. All
statements other than statements of fact, including information concerning
future results, are forward-looking statements. These forward-looking statements
are generally identified by the words "anticipate," "believe," "estimate,"
"expect," "intend," "may," "could" or similar expressions. Such forward-looking
statements include, but are not limited to, statements about the benefits of the
proposed transaction, including anticipated future financial and operating
results, synergies, accretion and growth rates, T-Mobile's, Sprint's and the
combined company's plans, objectives, expectations and intentions, and the
expected timing of completion of the proposed transaction. There are several
factors which could cause actual plans and results to differ materially from
those
--------------------------------------------------------------------------------
expressed or implied in forward-looking statements. Such factors include, but
are not limited to, adverse economic, political or market conditions in the U.S.
and international markets and other factors such as natural disasters, pandemics
and outbreaks of contagious diseases and other adverse public health
developments, such as COVID-19; the failure to obtain, or delays in obtaining,
required regulatory approvals, and the risk that such approvals may result in
the imposition of conditions that could adversely affect the combined company or
the expected benefits of the proposed transaction, or the failure to satisfy any
of the other conditions to the proposed transaction on a timely basis or at all;
the occurrence of events that may give rise to a right of one or both of the
parties to terminate the Business Combination Agreement; adverse effects on the
market price of T-Mobile's or Sprint's common stock and on T-Mobile's or
Sprint's operating results because of a failure to complete the proposed
transaction in the anticipated timeframe or at all; inability to obtain the
financing contemplated to be obtained in connection with the proposed
transaction on the expected terms or timing or at all; the ability of T-Mobile,
Sprint and the combined company to make payments on debt or to repay existing or
future indebtedness when due or to comply with the covenants contained therein;
adverse changes in the ratings of T-Mobile's or Sprint's debt securities or
adverse conditions in the credit markets; negative effects of the announcement,
pendency or consummation of the transaction on the market price of T-Mobile's or
Sprint's common stock and on T-Mobile's or Sprint's operating results, including
as a result of changes in key customer, supplier, employee or other business
relationships; significant transaction costs, including financing costs, and
unknown liabilities; failure to realize the expected benefits and synergies of
the proposed transaction in the expected timeframes or at all; costs or
difficulties related to the integration of Sprint's network and operations into
T-Mobile; the risk of litigation or regulatory actions, including the antitrust
litigation brought by the attorneys general of certain states and the District
of Columbia; the inability of T-Mobile, Sprint or the combined company to retain
and hire key personnel; the risk that certain contractual restrictions contained
in the Business Combination Agreement during the pendency of the proposed
transaction could adversely affect T-Mobile's or Sprint's ability to pursue
business opportunities or strategic transactions; effects of changes in the
regulatory environment in which T-Mobile and Sprint operate; changes in global,
political, economic, business, competitive and market conditions; changes in tax
and other laws and regulations; and other risks and uncertainties detailed in
the Form S-4, as well as in T-Mobile's Annual Report on Form 10-K for the fiscal
year ended December 31, 2019 and in its subsequent reports on Form 10-Q,
including in the sections thereof captioned "Risk Factors" and "Cautionary
Statement Regarding Forward-Looking Statements," as well as in its subsequent
reports on Form 8-K, all of which are filed with the SEC and available at
www.sec.gov and www.t-mobile.com. Forward-looking statements are based on
current expectations and assumptions, which are subject to risks and
uncertainties that may cause actual results to differ materially from those
expressed in or implied by such forward-looking statements. Given these risks
and uncertainties, persons reading this communication are cautioned not to place
undue reliance on such forward-looking statements. T-Mobile assumes no
obligation to update or revise the information contained in this communication
(whether as a result of new information, future events or otherwise), except as
required by applicable law.
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