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MetroPCS Amends Agreement to Combine with T-Mobile USA
Posted: 15-Apr-2013 [Source: MetroPCS]

[MetroPCS has sweetened the T-Mobile merger deal for its shareholders and has rescheduled the vote to April 24.]

Richardson, TX -- MetroPCS Communications, Inc. today announced that the MetroPCS board of directors unanimously approved, and the Company has entered into, an amendment, which amends certain terms of the business combination agreement, dated October 3, 2012 (as previously amended, "the business combination agreement"), with, among others, Deutsche Telekom AG ("DT"), to combine MetroPCS with T-Mobile USA ("T-Mobile") (the "amendment" and the business combination agreement as amended by the amendment, the "revised agreement").

The MetroPCS Board of Directors unanimously believes that the amendment significantly improves the value of the proposed combination for MetroPCS stockholders and that the proposed combination is in the best interest of all MetroPCS stockholders. The MetroPCS board unanimously recommends that MetroPCS stockholders vote their shares "FOR" all proposals relating to the proposed combination with T-Mobile.

Under the revised agreement, MetroPCS stockholders will continue to receive an immediate $1.5 billion aggregate cash payment, or approximately $4.06 per share (prior to the reverse stock split that will occur in connection with the closing of the proposed combination), as well as an approximate 26% ownership stake in the combined company that allows all MetroPCS stockholders to participate in the expected significant equity upside of the combined company.

The amended terms of the proposed combination include:

Reducing combined company debt issued to DT by $3.8 billion: The principal amount of debt issued to DT by T-Mobile, pursuant to the business combination agreement, has been lowered by $3.8 billion to $11.2 billion. This reduction meaningfully lowers the amount of the combined company's debt, creates additional financial flexibility and significantly increases the combined company's equity value.

Lowering the interest rate on combined company debt issued to DT: DT has agreed to lower the interest rate on the T-Mobile debt issued to DT pursuant to the business combination agreement by 50 basis points. This lower rate, which takes into account the new capital structure of the combined company, the improved capital markets environment in recent months and the interest rate level of MetroPCS' $3.5 billion of bonds priced in March 2013, will reduce the combined company's interest burden and increase free cash flow. If the DT Notes were priced on Friday, April 12, 2013, the interest rate would have been approximately 6.3%.

Extending the lock-up period for DT-owned stock: The lock-up period during which DT is prohibited from publicly selling shares in the combined company following the closing of the transaction has been extended from 6 to 18 months, subject to certain exceptions.

In aggregate, these revised terms reflect an approximately $3 per share increase in equity value for PCS equity holders.[1] The revised terms reflect a 122 - 134% premium[2] to MetroPCS' stand-alone value, an improvement of 38% compared to the initial terms[3] announced on October 3, 2012.

"We are pleased to offer even more value to MetroPCS stockholders through the amendment of certain terms of our proposed combination with T-Mobile," said Roger D. Linquist, Chairman and Chief Executive Officer of MetroPCS. "We look forward to achieving the significant benefits inherent in the proposed combination on behalf of our stockholders, employees, customers and partners. We share DT's commitment to the successful completion of the combination and look forward to creating the value leader in the U.S. wireless marketplace."

The relevant U.S. authorities have already approved the combination of MetroPCS and T-Mobile. These approvals are unaffected by the improved offer. The proposed combination can close promptly upon MetroPCS stockholder approval.

As previously announced, in light of the amendment, MetroPCS has rescheduled its Special Meeting of stockholders to vote on matters relating to the proposed combination of MetroPCS with T-Mobile to April 24, 2013. The record date for the Special Meeting has not changed, and MetroPCS stockholders of record as of the close of business on March 11, 2013, are entitled to vote at the Special Meeting.

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