11. DEBT

The carrying and principal values of debt consist of the following (in thousands):



	Maturity	As of				As of
	Date	June 30, 2014				December 31, 2013
		Principal Balance		Carrying Value		Principal Balance		Carrying Value
4.000% Convertible Senior Notes	Oct. 1, 2014	$	378,370	$	370,200	$	499,944	$	468,394
8.250% Senior Notes	Aug. 15, 2019		243,750		242,484		243,750		242,387
5.625% Senior Notes	Oct. 1, 2019		500,000		500,000		500,000		500,000
5.750% Senior Notes	July 15, 2020		800,000		800,000		800,000		800,000
4.254% 2010-1 Tower Securities	April 15, 2015		680,000		680,000		680,000		680,000
5.101% 2010-2 Tower Securities	April 17, 2017		550,000		550,000		550,000		550,000
2.933% 2012-1 Tower Securities	Dec. 15, 2017		610,000		610,000		610,000		610,000
2.240% 2013-1C Tower Securities	April 17, 2018		425,000		425,000		425,000		425,000
3.722% 2013-2C Tower Securities	April 17, 2023		575,000		575,000		575,000		575,000
3.598% 2013-1D Tower Securities	April 17, 2018		330,000		330,000		330,000		330,000
Revolving Credit Facility	May 9, 2017		100,000		100,000		215,000		215,000
2011 Term Loan	June 30, 2018		—		—		180,529		180,234
2012-1 Term Loan	May 9, 2017		180,000		180,000		185,000		185,000
2012-2 Term Loan	Sept. 28, 2019		—		—		109,971		109,745
2014 Term Loan	Mar. 24, 2021		1,500,000		1,496,407		—		—
BNDES Loans	various		—		—		5,847		5,847
Total debt		$	6,872,120	$	6,859,091	$	5,910,041	$	5,876,607
Less: current maturities of long-term debt					(1,080,200)				(481,886)
Total long-term debt, net of current maturities				$	5,778,891			$	5,394,721

The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the periods presented:



	For the three months ended June 30,								For the six months ended June 30,
	2014				2013				2014				2013
	Cash		Non-cash		Cash		Non-cash		Cash		Non-cash		Cash		Non-cash
	Interest		Interest		Interest		Interest		Interest		Interest		Interest		Interest

	(in thousands)
1.875% Convertible Senior Notes	$	—	$	—	$	551	$	2,161	$	—	$	—	$	2,671	$	10,435
4.0% Convertible Senior Notes		3,847		8,130		5,000		9,900		8,845		18,332		10,000		18,876
8.25% Senior Notes		5,027		49		5,027		45		10,055		97		10,055		89
5.625% Senior Notes		7,031		—		7,031		—		14,063		—		14,063		—
5.75% Senior Notes		11,500		—		11,500		—		23,000		—		23,000		—
2010 Secured Tower Rev Securities		14,345		—		14,344		—		28,691		—		28,688		—
2012 Secured Tower Rev Securities		4,521		—		4,521		—		9,042		—		9,042		—
2013 Secured Tower Rev Securities		10,804		—		8,784		—		21,609		—		8,784		—
Revolving Credit Facility		940		—		1,121		—		2,272		—		2,482		—
2011 Term Loan		—		—		2,456		24		696		6		7,072		68
2012-1 Term Loan		1,114		—		1,193		—		2,114		—		2,393		—
2012-2 Term Loan		—		—		1,496		14		424		4		4,308		41
2014 Term Loan		12,323		114		—		—		16,453		157		—		—
Other		46		—		93		—		261		—		24		—
Total	$	71,498	$	8,293	$	63,117	$	12,144	$	137,525	$	18,596	$	122,582	$	29,509

Revolving Credit Facility under the Senior Credit Agreement

The Revolving Credit Facility is governed by the Senior Credit Agreement. As of June 30, 2014, the Revolving Credit Facility consisted of a revolving loan under which up to $770.0 million aggregate principal amount may be borrowed, repaid and redrawn, subject to compliance with specific financial ratios and the satisfaction of other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest at the Eurodollar Rate plus a margin that ranges from 187.5 basis points to 237.5 basis points or at a Base Rate plus a margin that ranges from 87.5 basis points to 137.5 basis points, in each case based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. If not earlier terminated by SBA Senior Finance II LLC (“SBA Senior Finance II”), a subsidiary of the Company, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, May 9, 2017. The proceeds available under the Revolving Credit Facility may be used for general corporate purposes. A per annum commitment fee of 0.375% to 0.5% of the unused commitments under the Revolving Credit Facility is charged based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA (calculated in accordance with the Senior Credit Agreement). SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of a period may not be reflective of the total amounts outstanding during such period.

During the three and six months ended June 30, 2014, the Company borrowed $100.0 million and $275.0 million, respectively, under the Revolving Credit Facility. During the six months ended June 30, 2014, the Company repaid $390.0 million of the outstanding balance under the Revolving Credit Facility. As of June 30, 2014, $100.0 million was outstanding under the Revolving Credit Facility. Subsequent to June 30, 2014, the Company repaid the remaining $100.0 million outstanding balance under the Revolving Credit Facility with proceeds from the issuance of the 4.875% Notes (defined below). As of the date of this filing, no amounts were outstanding under the Revolving Credit Facility, and the amount available based on specified covenants under the facility was $720.0 million.

On February 7, 2014, SBA Senior Finance II entered into a Second Amended and Restated Credit Agreement (as amended and restated, the “Senior Credit Agreement”) with several banks and other financial institutions or entities from time to time parties to the Senior Credit Agreement to, among other things, obtain a $1.5 billion senior secured term loan (the “2014 Term Loan”) and to amend certain terms of the existing senior credit agreement. In addition to providing for the 2014 Term Loan, the Senior Credit Agreement was amended to, among other things, amend the terms of certain events of default, modify certain negative covenants and remove the parent financial maintenance leverage covenant to reflect the increased size of SBA Senior Finance II and its restricted subsidiaries. All other material terms of the Senior Credit Agreement, as it existed prior to February 7, 2014, remained unchanged.

Term Loans under the Senior Credit Agreement

2011 Term Loan

On February 7, 2014, the Company repaid the remaining $180.5 million outstanding principal balance of the 2011 Term Loan. In connection with the prepayment, the Company expensed $1.1 million of net deferred financing fees and $0.3 million of discount related to the debt.

2012-1 Term Loan

The 2012-1 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $200.0 million that matures on May 9, 2017. The 2012-1 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus a margin that ranges from 100 to 150 basis points or the Eurodollar Rate plus a margin that ranges from 200 to 250 basis points, in each case based on the ratio of Consolidated Total Debt to Annualized Borrower EBITDA (calculated in accordance with the Senior Credit Agreement). As of June 30, 2014, the 2012-1 Term Loan was accruing interest at 2.65% per annum. Principal payments on the 2012-1 Term Loan commenced on September 30, 2012 and are being made in quarterly installments on the last day of each March, June, September, and December, in an amount equal to $2.5 million for each of the first eight quarters, $3.75 million for the next four quarters and $5.0 million for each quarter thereafter. SBA Senior Finance II has the ability to prepay any or all amounts under the 2012-1 Term Loan without premium or penalty. To the extent not previously repaid, the 2012-1 Term Loan will be due and payable on the maturity date. The 2012-1 Term Loan was issued at par. The Company incurred deferred financing fees of $2.7 million in relation to this transaction which are being amortized through the maturity date.

During the three and six months ended June 30, 2014, the Company repaid $2.5 million and $5.0 million, respectively, of principal on the 2012-1 Term Loan. As of June 30, 2014, the 2012-1 Term Loan had a principal balance of $180.0 million.

2012-2 Term Loan

On February 7, 2014, the Company repaid the entire $110.0 million outstanding principal balance of the 2012-2 Term Loan. In connection with the prepayment, the Company expensed $1.0 million of net deferred financing fees and $0.2 million of discount related to the debt.

2014 Term Loan

The 2014 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $1.5 billion that matures on March 24, 2021. The 2014 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus 150 basis points (with a Base Rate floor of 1.75%) or the Eurodollar Rate plus 250 basis points (with a Eurodollar Rate floor of 0.75%). The 2014 Term Loan was issued at 99.75% of par value. As of June 30, 2014, the 2014 Term Loan was accruing interest at 3.25% per annum. Principal payments on the 2014 Term Loan will commence on September 30, 2014 and will be made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $3.75 million. SBA Senior Finance II has the ability to prepay any or all amounts under the 2014 Term Loan. However, to the extent the 2014 Term Loan is prepaid prior to August 7, 2014 from proceeds of certain refinancing or repricing transactions, a prepayment fee equal to 1.0% of the aggregate principal amount of such prepayment will apply. The Company has incurred deferred financing fees of approximately $12.8 million to date in relation to this transaction which are being amortized through the maturity date.

Net proceeds from the 2014 Term Loan were used (1) to repay in full the remaining $180.5 million balance of the 2011 Term Loan, (2) to repay in full the remaining $110.0 million balance of the 2012-2 Term Loan, (3) to repay the $390.0 million outstanding balance under the Revolving Credit Facility, (4) to pay the cash consideration in connection with SBA’s acquisition of towers from Oi S.A. in Brazil, and (5) for general corporate purposes.

Secured Tower Revenue Securities

2010 Tower Securities

On April 16, 2010, the Company, through a New York common law trust (the “Trust”), issued $680.0 million of 2010-1 Tower Securities and $550.0 million of 2010-2 Tower Securities (together the “2010 Tower Securities”). The 2010-1 Tower Securities have an annual interest rate of 4.254% and the 2010-2 Tower Securities have an annual interest rate of 5.101%. The weighted average annual fixed interest rate of the 2010 Tower Securities is 4.7%, including borrowers’ fees, payable monthly. The anticipated repayment date and the final maturity date for the 2010–1 Tower Securities is April 15, 2015 and April 16, 2040, respectively. The anticipated repayment date and the final maturity date for the 2010–2 Tower Securities is April 17, 2017 and April 15, 2042, respectively. The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those SBA entities that are borrowers on the mortgage loan (the “Borrowers”). The Company incurred deferred financing fees of $18.0 million in relation to this transaction which are being amortized through the anticipated repayment date of each of the 2010 Tower Securities.

2012-1 Tower Securities

On August 9, 2012, the Company, through the Trust, issued $610.0 million of Secured Tower Revenue Securities Series 2012-1 (the “2012-1 Tower Securities”) which have an anticipated repayment date and a final maturity date of December 15, 2017 and December 15, 2042, respectively. The fixed interest rate of the 2012-1 Tower Securities is 2.933% per annum, payable monthly. The Company incurred deferred financing fees of $14.9 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2012-1 Tower Securities.

2013 Tower Securities

On April 18, 2013, the Company, through the Trust, issued $425.0 million of 2.240% Secured Tower Revenue Securities Series 2013-1C which have an anticipated repayment date and a final maturity date of April 17, 2018 and April 17, 2043, respectively, $575.0 million of 3.722% Secured Tower Revenue Securities Series 2013-2C which have an anticipated repayment date and a final maturity date of April 17, 2023 and April 17, 2048, respectively, and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D which have an anticipated repayment date and a final maturity date of April 17, 2018 and April 17, 2043, respectively (collectively the “2013 Tower Securities”). The aggregate $1.33 billion of 2013 Tower Securities have a blended interest rate of 3.218% and an initial weighted average life through the anticipated repayment date of 7.2 years. The Company incurred an aggregate of deferred financing fees of $25.5 million in relation to this transaction which are being amortized through the anticipated repayment date of each of the 2013 Tower Securities.

As of June 30, 2014, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.

4.0% Convertible Senior Notes due 2014

On April 24, 2009, the Company issued $500.0 million of its 4.0% Convertible Senior Notes (“4.0% Notes”) in a private placement transaction. Interest on the 4.0% Notes is payable semi-annually on April 1 and October 1. The maturity date of the 4.0% Notes is October 1, 2014. The Company incurred fees of $11.7 million with the issuance of the 4.0% Notes of which $7.7 million was recorded as deferred financing fees and $4.0 million was recorded as a reduction to shareholders’ equity.

The 4.0% Notes are convertible, at the holder’s option, into shares of the Company’s Class A common stock, at an initial conversion rate of 32.9164 shares of its Class A common stock per $1,000 principal amount of 4.0% Notes (subject to certain customary adjustments), which is equivalent to an initial conversion price of approximately $30.38 per share or a 22.5% conversion premium based on the last reported sale price of $24.80 per share of the Company’s Class A common stock on the Nasdaq Global Select Market on April 20, 2009, the purchase agreement date.

Concurrently with the pricing of the 4.0% Notes, the Company entered into convertible note hedge and warrant transactions with affiliates of certain of the initial purchasers of the convertible notes. The initial strike price of the convertible note hedge transactions relating to the 4.0% Notes is $30.38 per share of the Company’s Class A common stock (the same as the initial conversion price of the 4.0% Notes) and the upper strike price of the warrant transactions is $44.64 per share.

The Company is amortizing the debt discount on the 4.0% Notes utilizing the effective interest method over the life of the 4.0% Notes which increases the effective interest rate of the 4.0% Notes from its coupon rate of 4.0% to 12.8%. As of June 30, 2014, the carrying amount of the equity component related to the 4.0% Notes was $166.9 million.

The 4.0% Notes are reflected in current maturities of long-term debt in the Consolidated Balance Sheets at their carrying value. The following table summarizes the balances for the 4.0% Notes:



	As of
	June 30, 2014		December 31, 2013

	(in thousands)
Principal balance	$	378,370	$	499,944
Debt discount		(8,170)		(31,550)
Carrying value	$	370,200	$	468,394

At the time of the issuance of the 4.0% Notes, the Company elected to settle its conversion obligations in stock. Effective March 17, 2014, the Company elected to settle the principal amount of any conversions in cash and any additional conversion consideration at the conversion rate then applicable in shares of its Class A common stock. Concurrently with the settlement of any 4.0% Notes converted, the Company will settle the associated convertible note hedges and receive an equal number of shares to those issued to the noteholders.

During the three and six months ended June 30, 2014, the 4.0% Notes were convertible based on the fact that the closing price per share of the Company’s Class A common stock exceeded $39.49 for at least 20 trading days during the 30 consecutive trading day period ending on March 31, 2014 and December 31, 2013, respectively, and remain convertible as of the date of this filing. During the three and six months ended June 30, 2014, holders of the 4.0% Notes converted $121.5 million and $121.6 million, respectively, in principal amount of 4.0% Notes. The Company settled its conversion obligation through the payment of the principal amount in cash and the issuance of 2.7 million shares of its Class A common stock during the three and six months ended June 30, 2014. Concurrently with these conversions, the related convertible note hedges were settled, and the Company received 2.7 million shares of its Class A common stock, of which 0.1 million shares were received subsequent to June 30, 2014. As a result, the Company’s outstanding share count has not been impacted by the conversion of these notes. In addition, the Company received conversion notices totaling $11.3 million in principal amount of the 4.0% Notes which will settle during the third quarter of 2014 for cash and shares of its Class A common stock.

During the three months ended June 30, 2014, the Company paid $276.2 million to early settle approximately 30% of the outstanding warrants sold in connection with the issuance of the 4.0% Notes, representing approximately 4.9 million underlying shares of Class A common stock, scheduled to mature in the first quarter of 2015. Subsequent to June 30, 2014, the Company paid $66.5 million to early settle approximately 7.5% of the original total outstanding warrants, representing approximately 1.2 million underlying shares, scheduled to mature in the first quarter of 2015. The Company’s obligations under the remaining 10.3 million warrants are scheduled to settle over a 60 trading day period commencing on January 2, 2015 unless otherwise settled early.

Senior Notes

8.25% Senior Notes

On July 24, 2009, SBA Telecommunications LLC (“Telecommunications”), the Company’s wholly owned subsidiary, issued $375.0 million of unsecured senior notes due August 15, 2019 (the “8.25% Notes”). The 8.25% Notes have an interest rate of 8.25% per annum and were issued at a price of 99.152% of their face value. Interest is due semi-annually on February 15 and August 15 of each year beginning on February 15, 2010. The Company incurred deferred financing fees of $5.4 million in relation to the 8.25% Notes which are being amortized through the maturity date.

On April 13, 2012, the Company used the proceeds of an equity offering to redeem $131.3 million in aggregate principal amount of its 8.25% Notes and to pay $10.8 million as a premium on the redemption of the 8.25% Notes. The Company expensed $0.9 million and $2.4 million of debt discount and deferred financing fees, respectively, related to the redemption of the 8.25% Notes.

As of June 30, 2014, the principal balance of the 8.25% Notes was $243.8 million.

On July 15, 2014, the Company provided notice to the trustee that it would be exercising its call right with respect to the 8.25% Notes effective August 15, 2014. As of this date, the Company will repay the remaining $243.8 million principal and a call premium of $10.1 million to fully settle these notes.

5.75% Senior Notes

On July 13, 2012, Telecommunications issued $800.0 million of unsecured senior notes due July 15, 2020 (the “5.75% Notes”). The 5.75% Notes accrue interest at a rate of 5.75% and were issued at par. Interest on the 5.75% Notes is due semi-annually on July 15 and January 15 of each year beginning on January 15, 2013. The Company incurred deferred financing fees of $14.0 million in relation to this transaction which are being amortized through the maturity date.

5.625% Senior Notes

On September 28, 2012, the Company issued $500.0 million of unsecured senior notes due October 1, 2019 (the “5.625% Notes”). The 5.625% Notes accrue interest at a rate of 5.625% per annum and were issued at par. Interest on the 5.625% Notes is due semi-annually on April 1 and October 1 of each year beginning on April 1, 2013. The Company incurred deferred financing fees of $8.5 million in relation to this transaction which are being amortized through the maturity date.

4.875% Senior Notes

On July 1, 2014, the Company issued $750.0 million of unsecured senior notes due July 15, 2022 (the “4.875% Notes”). The 4.875% Notes were issued at 99.178% of par value. Interest on the 4.875% Notes is payable semi-annually on January 15 and July 15 of each year beginning January 15, 2015. Net proceeds from the 4.875% Notes were used to pay the conversion obligations with respect to $121.5 million aggregate principal amount of the 4.0% Notes. The remaining net proceeds will be used to redeem all of the 8.25% Notes due 2019 including the associated call premium and for general corporate purposes.

BNDES Loans

During the six months ended June 30, 2014, the Company had borrowings of $0.4 million and repayments of $6.3 million under the BNDES Loans. The BNDES Loans were repaid in full in April 2014.