T-Mobile Launches Strategic Exchange Offers and Consent Solicitations for United States Cellular Corporation’s Debt Securities
In a significant financial move, T-Mobile US, Inc. (NASDAQ: TMUS), along with its wholly-owned subsidiary T-Mobile USA, Inc., has announced the commencement of exchange offers and consent solicitations for certain outstanding senior notes issued by United States Cellular Corporation (USCC). This initiative is part of T-Mobile’s broader strategy to streamline operations following the acquisition of select assets from USCC, as outlined in the Securities Purchase Agreement announced on May 24, 2024.
Key Details of the Exchange Offers
The exchange offers aim to replace USCC’s existing senior notes with new notes issued by T-Mobile USA. The following series of USCC senior notes are included in the exchange offers:
- 6.700% Senior Notes due 2033: These will be exchanged for new 6.700% Senior Notes due 2033 issued by T-Mobile USA.
- 6.250% Senior Notes due 2069: These will be replaced with new 6.250% Senior Notes due 2069.
- 5.500% Senior Notes due March 2070: These will be swapped for new 5.500% Senior Notes due March 2070.
- 5.500% Senior Notes due June 2070: These will be exchanged for new 5.500% Senior Notes due June 2070.
Each new note mirrors the interest rate, maturity date, and payment terms of the corresponding USCC note, ensuring continuity for investors.
Enhanced Value for Early Participants
To incentivize early participation, T-Mobile is offering additional benefits for holders who tender their USCC notes before the Early Participation Date, set for June 13, 2025. Participants will receive an Early Participation Premium and a Cash Payment as part of the exchange consideration. For instance, holders of the Old USCC 2033 Notes can receive $1,000 in principal amount of the new notes plus a $1.00 cash payment if they act before the Early Participation Date. Similarly, holders of the other series of notes will receive $25 in principal amount of the corresponding new notes and a $0.025 cash payment.
For those who tender after the Early Participation Date but before the Expiration Date on July 1, 2025, the exchange consideration will exclude the Early Participation Premium and Cash Payment. This tiered structure encourages timely action while maintaining flexibility for late participants.
Soliciting Consents for Proposed Amendments
In conjunction with the exchange offers, T-Mobile is soliciting consents from USCC note holders to amend the indentures governing the Old USCC Notes. These amendments aim to modify or eliminate certain notice requirements and restrictive covenants, providing greater operational flexibility for T-Mobile USA. To adopt these changes, T-Mobile must secure consents from holders representing a majority of the outstanding principal amount of each series of notes (the Requisite Consents).
If the Requisite Consents are obtained, a supplemental indenture will be executed promptly, giving effect to the proposed amendments. Importantly, holders who do not provide valid, unrevoked consents will still be bound by the amendments once they become operative.
Strategic Benefits for T-Mobile and Investors
This initiative aligns with T-Mobile’s goal of consolidating its financial structure while enhancing value for investors. By issuing new notes under its own subsidiary, T-Mobile USA ensures that the debt obligations are integrated into its broader financial framework. Additionally, the New T-Mobile Notes will be unsecured and unsubordinated, ranking equally with T-Mobile USA’s other unsecured debt. They will also be fully and unconditionally guaranteed by T-Mobile’s guarantors, providing added security for investors.
Furthermore, T-Mobile USA has applied to list the New 2069 Notes, New March 2070 Notes, and New June 2070 Notes on Nasdaq’s U.S. Bond Exchange, subject to approval. This move is expected to enhance liquidity and accessibility for investors.
Risks and Considerations
While the exchange offers present an attractive opportunity, investors should carefully review the associated risks. For example, USCC may choose to redeem or repurchase any remaining Old USCC Notes that are not tendered, potentially on more favorable terms. Additionally, USCC retains the discretion to delist certain Old USCC Notes from the New York Stock Exchange, which could impact liquidity for non-participating holders.
T-Mobile emphasizes that the success of the exchange offers and consent solicitations depends on meeting specific conditions, including the effectiveness of the Registration Statement filed with the SEC and the completion of the underlying asset acquisition from USCC.
How to Participate
Holders of the Old USCC Notes are encouraged to review the detailed terms outlined in the Prospectus, which forms part of the Registration Statement filed with the SEC. Copies of the Prospectus can be obtained from D.F. King & Co., Inc., the information and exchange agent for the offers. Questions regarding procedures or terms can be directed to the dealer managers, Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC.
A Strategic Move Toward Consolidation
T-Mobile’s exchange offers and consent solicitations represent a calculated step toward integrating USCC’s financial obligations into its ecosystem. By offering attractive terms and incentives, the company aims to ensure a smooth transition while delivering value to participating investors.
As the telecommunications industry continues to evolve, strategic financial maneuvers like this one underscore T-Mobile’s commitment to maintaining a robust and efficient capital structure. Investors and stakeholders are encouraged to stay informed and evaluate the opportunities presented by this landmark transaction.
For more information, visit T-Mobile’s investor relations website or contact the designated representatives to learn how you can participate in this transformative initiative.
