
Note 15.	Subsequent Events

SoftBank Transaction

On October 15, 2012, SOFTBANK CORP. and certain of its wholly-owned subsidiaries (together, "SoftBank") and Sprint entered into a Bond Purchase Agreement (Bond Agreement) and an Agreement and Plan of Merger (Merger Agreement) pursuant to which SoftBank would invest, in aggregate, approximately $20.1 billion for an approximately 70% controlling interest in a subsidiary (New Sprint), an entity owning 100% of the equity interest in Sprint subsequent to consummation of the transaction, with the remaining 30% interest in New Sprint being publicly traded.

Bond Agreement

Under the Bond Agreement, on October 22, 2012, Sprint issued a convertible bond (Bond) to SoftBank with a face amount of $3.1 billion, stated interest rate of 1%, and maturity date of October 15, 2019, which is convertible into 590,476,190 shares of Sprint common stock at $5.25 per share, or approximately 19.65% of the current outstanding shares of Sprint common stock (pre-conversion). Interest on the Bond will be due and payable in cash semiannually in arrears on April 15 and October 15 of each year, commencing on April 15, 2013. Upon receipt of regulatory approval, the Bond will be converted into Sprint shares immediately prior to consummation of the merger and may not otherwise be converted prior to the termination of the Merger Agreement. Conversion of the Bond is subject in any case to receipt of any required approvals and, subject to certain exceptions, to receipt of waivers under the Company's existing credit facilities. Subject to certain exceptions, SoftBank may not transfer the Bond without Sprint's consent.

Merger Agreement

In the merger, which is subject to shareholder and regulatory approval, SoftBank will further capitalize New Sprint with an additional $17.0 billion. Approximately $4.9 billion will be used to purchase a new issuance of New Sprint common stock at $5.25 per share and the remaining consideration, approximately $12.1 billion, will be distributed to Sprint shareholders in exchange for their shares of Sprint. Sprint shareholders can elect to receive cash consideration of $7.30 per share or one share of New Sprint per share of Sprint subject to proration. Upon consummation of the merger, SoftBank will receive a five-year warrant to purchase 54,579,924 shares in New Sprint at $5.25 per share for consideration of approximately $300 million upon exercise. Upon consummation of the merger, Sprint will be a wholly-owned subsidiary of New Sprint. New Sprint will be renamed Sprint Corporation and will be a publicly traded company, with 70% ownership held by SoftBank and 30% publicly traded, based on the assumed exercise of outstanding warrants. The Merger Agreement contains customary conditions and covenants for a transaction of this nature, including certain termination rights, whereby Sprint may be required to pay a termination fee of $600 million to SoftBank.

Under the terms of the EDC facility, the secured equipment credit facility and our revolving credit facility, consummation of the merger would constitute a change of control that would require repayment of all outstanding balances thereunder. Amounts outstanding under the EDC facility and secured equipment credit facility, which were approximately $577 million in the aggregate at September 30, 2012, would become due and payable at the time of closing. In addition, our $2.2 billion revolving bank credit facility would expire upon a change of control, of which approximately $1.0 billion was outstanding as of September 30, 2012 through letters of credit, including the letter of credit required by the Report and Order. Sprint expects to enter into discussions with existing lenders under these arrangements to obtain waivers for the proposed transaction.

As of September 30, 2012, approximately $8.8 billion of our senior notes and guaranteed notes provided holders with the right to require us to repurchase the notes if a change of control triggering event (as defined in our indenture and supplemental indentures governing applicable notes) occurs, which includes both a change of control (which will occur upon consummation of the merger) and a ratings decline of the applicable notes by each of Moody's Investor Services and Standard & Poor's Rating Services. If we are required to make a change of control offer, we will offer a cash payment equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest.

In addition, the Company has recently received several complaints asserting class actions for breach of fiduciary duty and other theories relating to the transaction. The Company intends to vigorously defend these lawsuits and because these cases are still in the preliminary stages, has not yet determined what effect the lawsuits will have, if any, on its financial position, results of operations or cash flows.

Clearwire

On October 17, 2012, in accordance with the Clearwire Equityholders' Agreement, one of Clearwire's equityholders, Eagle River Holdings, LLC (Eagle River) notified Sprint and the other parties to the Equityholders' Agreement of its intent to sell its ownership in 30.9 million shares of Class A Common Stock and 2.7 million shares of Class B Interests (together, “Interests”) for a total purchase price of $100 million in cash. In response to the notification, Sprint informed Eagle River of its desire to purchase all of the Interests (or in the event that one or more of the other equityholders elects to purchase Interests, the maximum number of Interests Sprint is entitled to purchase). Upon the closing of the purchase, Sprint's ownership interest in Clearwire would be within a range of 50.0% to 50.5% dependent upon the final number of shares acquired and excluding any additional share issuances prior to the close of the purchase. Sprint's existing right under the Clearwire Equityholders' Agreement provides that Sprint can nominate seven of the thirteen directors to the Clearwire Board. One of the Sprint designees is required to be an independent director for NASDAQ listing purposes. Upon closing of the Eagle River transaction, Sprint will no longer be subject to the requirement that one of its seven designees be such an independent director of Sprint; however, Sprint will not obtain the right to control the actions of Clearwire. In addition, upon closing, the composition of the remaining board seats will be modified so that the Nominating Committee of the Clearwire Board will have the right to nominate three independent directors to the Clearwire Board, while the remaining investors under the Clearwire Equityholders' Agreement will have the right to nominate three directors. Prior to closing of the transaction, the Nominating Committee had the right to nominate two independent directors to the Clearwire Board, while the remaining investors under the Clearwire Equityholders' Agreement had the right to nominate four directors. Sprint will continue to account for its ownership interests in Clearwire under the equity method of accounting given the significant participative governance rights provided to the minority holders in Clearwire.

As a result of the consummation of Sprint's purchase of additional Interests, Clearwire could be considered a subsidiary under certain agreements relating to our indebtedness. At that time, certain actions or defaults by Clearwire would, if viewed as a subsidiary, result in a breach of covenants, including potential cross-default provisions, under certain agreements relating to our indebtedness. The Clearwire Equityholders' Agreement provides Sprint with the right to unilaterally surrender voting securities to reduce its voting security percentage below 50% which, if exercised, would eliminate the potential for Clearwire to be considered a subsidiary of Sprint under those debt agreements and would significantly mitigate the possibility of an event, with respect to Clearwire, that would cross-default against Sprint's debt obligations. Subsequent to the consummation of Sprint's purchase of additional Interests, Sprint may exercise its right to reduce its voting security percentage below 50%. The exercise of this right does not impact our ability to nominate seven of Clearwire's thirteen Board seats.

Acquisition of Assets from U.S. Cellular

On November 6, 2012, Sprint entered into a definitive agreement with United States Cellular Corporation (U.S. Cellular) to acquire PCS spectrum and approximately 585,000 customers in parts of Illinois, Indiana, Michigan, Missouri and Ohio, including the Chicago and St. Louis markets, for $480 million in cash. Sprint has agreed, in connection with the acquisition, to reimburse U.S. Cellular for certain network shutdown costs in these markets. These costs are expected to range from $130 million to $150 million on a net present value basis, but in no event will Sprint's reimbursement obligation exceed $200 million on an undiscounted basis. The additional spectrum will be used to supplement Sprint's coverage in these areas. Sprint and U.S. Cellular will enter into transition services agreements as a condition to closing of the acquisition which will outline the terms of services to be provided by U.S. Cellular during the period after closing and prior to the transfer of the acquired customers to Sprint's network. The transaction is subject to customary regulatory approvals and is expected to close in mid 2013.