DEBT

The carrying and principal values of debt consist of the following:


	Maturity	As of					As of
	Date	March 31, 2013					December 31, 2012
		Principal		Carrying			Principal		Carrying
		Balance		Value			Balance		Value
		(in thousands)

1.875% Convertible Senior Notes	May 1, 2013	$	463,514	$	460,454		$	468,836	$	457,351
4.000% Convertible Senior Notes	Oct. 1, 2014		499,983		439,723			499,987		430,751
8.250% Senior Notes	Aug. 15, 2019		243,750		242,249			243,750		242,205
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% Secured Tower Revenue Securities Series 2010-1	April 15, 2015		680,000		680,000			680,000		680,000
5.101% Secured Tower Revenue Securities Series 2010-2	April 17, 2017		550,000		550,000			550,000		550,000
2.933% Secured Tower Revenue Securities Series 2012-1	Dec. 15, 2017		610,000		610,000			610,000		610,000
Revolving Credit Facility	May 9, 2017		100,000		100,000			100,000		100,000
2011 Term Loan B	June 30, 2018		491,250		490,313			492,500		491,518
2012-1 Term Loan A	May 9, 2017		192,500		192,500			195,000		195,000
2012-2 Term Loan B	Sept. 28, 2019		299,250		298,554			300,000		299,278

Total debt			5,430,247		5,363,793			5,440,073		5,356,103
Less: current maturities of long-term debt					(478,454	)				(475,351	)

Total long-term debt, net of current maturities				$	4,885,339				$	4,880,752

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


	Three months ended					Three months ended
	March 31, 2013					March 31, 2012
	Cash Interest			Non-cash Interest		Cash Interest			Non-cash Interest
	(in thousands)					(in thousands)
1.875% Convertible Senior Notes	$	2,120		$	8,273	$	2,508		$	8,913
4.0% Convertible Senior Notes		5,000			8,975		5,000			7,890
8.0% Senior Notes		—			—		7,500			81
8.25% Senior Notes		5,027			44		7,734			62
5.625% Senior Notes		7,031			—		—			—
5.75% Senior Notes		11,500			—		—			—
2010 Secured Tower Revenue Securities		14,344			—		14,344			—
2012 Secured Tower Revenue Securities		4,521			—		—			—
Revolving Credit Facility		1,362			—		515			—
2011 Term Loan		4,617			45		4,715			45
2012-1 Term Loan		1,200			—		—			—
2012-2 Term Loan		2,812			27		—			—
Other		(69	)		—		(68	)		—

Total	$	59,465		$	17,364	$	42,248		$	16,991

Revolving Credit Facility under the Senior Credit Agreement

The Revolving Credit Facility is governed by the Senior Credit Agreement. On January 28, 2013, SBA Senior Finance II LLC entered into a Revolving Credit Commitment Increase Supplement, with Deutsche Bank Trust Company Americas, Toronto Dominion (Texas) LLC, as administrative agent, and The Toronto-Dominion Bank, New York Branch, as issuing lender, pursuant to which SBA Senior Finance II exercised its right to upsize the aggregate principal amount of its Revolving Credit Facility from $700 million to $730 million. All other terms of the Senior Credit Agreement remained the same.

On March 14, 2013, SBA Senior Finance II LLC entered into a Revolving Credit Commitment Increase Supplement, with Citibank, Toronto Dominion (Texas) LLC, as administrative agent, and The Toronto-Dominion Bank, New York Branch, as issuing lender, pursuant to which SBA Senior Finance II exercised its right to upsize the aggregate principal amount of its Revolving Credit Facility from $730 million to $770 million effective March 28, 2013. All other terms of the Senior Credit Agreement remained the same.

As of March 31, 2013, the Revolving Credit Facility consists 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, 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. As of March 31, 2013, the amount outstanding under the Revolving Credit Facility of $100 million was accruing interest at 2.335% per annum.

During the three months ended March 31, 2013, the Company did not borrow any additional amounts under the Revolving Credit Facility. As of March 31, 2013, the availability under the Revolving Credit Facility was $670.0 million, subject to compliance with specified financial ratios, and satisfaction of customary conditions to borrowing.

On April 25, 2013, the Company paid off the $100 million outstanding balance on the Revolving Credit Facility using proceeds from the 2013 Tower Securities (defined below).

Term Loans under the Senior Credit Agreement

2011 Term Loan

The 2011 Term Loan consists of a senior secured term loan in an initial aggregate principal amount of $500.0 million and matures on June 30, 2018. The 2011 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus a margin of 175 basis points (with a Base Rate floor of 2%) or Eurodollar Rate plus a margin of 275 basis points (with a Eurodollar Rate floor of 1%). As of March 31, 2013, the 2011 Term Loan was accruing interest at 3.75% per annum. Principal on the 2011 Term Loan is repaid in quarterly installments of $1.25 million on the last day of each March, June, September and December, which commenced on September 30, 2011. The remaining principal balance of the 2011 Term Loan will be due and payable on the maturity date. SBA Senior Finance II has the ability to prepay any or all amounts under the 2011 Term Loan without premium or penalty. The 2011 Term Loan was issued at 99.75% of par value. As of March 31, 2013, the Company has incurred deferred financing fees of $4.9 million associated with this transaction which are being amortized through the maturity date.

During the three months ended March 31, 2013, the Company made repayments totaling $1.3 million on the 2011 Term Loan. As of March 31, 2013, the 2011 Term Loan had a principal balance of $491.3 million. On April 24, 2013, the Company paid off $310.7 million of the 2011 Term Loan using proceeds from the 2013 Tower Securities (defined below) and wrote off $0.8 million of deferred financing fees and $0.6 million of discount related to the debt. As a result of the prepayment, no further scheduled quarterly principal payments are required until the maturity date.

2012-1 Term Loan

The 2012-1 Term Loan consists of a senior secured term loan in an initial aggregate principal amount of $200.0 million and 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 March 31, 2013, the 2012-1 Term Loan was accruing interest at 2.46% per annum. Having commenced on September 30, 2012, principal of the 2012-1 Term Loan is being repaid 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 paid, the 2012-1 Term Loan will be due and payable on the maturity date. The 2012-1 Term Loan was issued at par. As of March 31, 2013, the Company has incurred deferred financing fees of $2.7 million in relation to this transaction which are being amortized through the maturity date.

During the three months ended March 31, 2013, the Company made repayments totaling $2.5 million on the 2012-1 Term Loan. As of March 31, 2013, the 2012-1 Term Loan had a principal balance of $192.5 million.

2012-2 Term Loan

The 2012-2 Term Loan consists of a senior secured term loan in an initial aggregate principal amount of $300.0 million and matures on September 28, 2019. The 2012-2 Term Loan accrues interest, at SBA Senior Finance II’s election, at either the Base Rate plus 175 basis points (with a Base Rate floor of 2%) or Eurodollar Rate plus 275 basis points (with a Eurodollar Rate floor of 1%). As of March 31, 2013, the 2012-2 Term Loan was accruing interest at 3.750% per annum. Principal of the 2012-2 Term Loan is to be repaid in equal quarterly installments on the last day of each March, June, September and December, commencing in March 2013, in an aggregate amount equal to $3.0 million per year. SBA Senior Finance II has the ability to prepay any or all amounts under the 2012-2 Term Loan without premium or penalty, with the exception of a 1% premium if prepayment occurs during the first year of the loan with proceeds from certain refinancing or repricing transactions. To the extent not previously paid, the 2012-2 Term Loan will be due and payable on the maturity date. The 2012-2 Term Loan was issued at 99.75% of par value. As of March 31, 2013, the Company has incurred deferred financing fees of approximately $3.5 million in relation to this transaction which are being amortized through the maturity date.

During the three months ended March 31, 2013, the Company made repayments totaling $0.8 million on the 2012-2 Term Loan. As of March 31, 2013, the 2012-2 Term Loan had a principal balance of $299.3 million. On April 24, 2013, the Company paid off $189.3 million of the 2012-2 Term Loan using proceeds from the 2013 Tower Securities (defined below) and wrote off $0.2 million of deferred financing fees and $0.4 million of discount related to the debt. As a result of the prepayment, no further scheduled quarterly principal payments are required until the maturity date.

Secured Tower Revenue Securities

2010 Tower Securities

On April 16, 2010, 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 coupon 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 the Borrowers. As of March 31, 2013, the Company had deferred financing fees of approximately $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 million of Secured Tower Revenue Securities Series 2012-1 (the “2012-1 Tower Securities”) which have an anticipated repayment date of December 15, 2017 and a final maturity date of December 15, 2042. The fixed coupon interest rate of the 2012-1 Tower Securities is 2.933% per annum, payable monthly. As of March 31, 2013, the Company had deferred financing fees of approximately $14.8 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2012-1 Tower Securities.

As of March 31, 2013, the Borrowers met the required Debt Service Coverage Ratio and were in compliance with all other covenants as set forth in the mortgage loan agreement.

2013 Tower Securities

On April 18, 2013, the Company, through the Trust, issued $425 million of 2.240% Secured Tower Revenue Securities Series 2013-1C which have an anticipated repayment date of April 2018 and a final maturity date of April 2043, $575 million of 3.722% Secured Tower Revenue Securities Series 2013-2C which have an anticipated repayment date of April 2023 and a final maturity date of April 2048, and $330 million of 3.598% Secured Tower Revenue Securities Series 2013-1D which have an anticipated repayment date of April 2018 and a final maturity date of April 2043 (the “2013 Tower Securities”). The aggregate $1.33 billion of 2013 Tower Securities have a blended interest rate of 3.218% and a weighted average life through the anticipated repayment date of 7.2 years.

Net proceeds from this offering were used to repay the $100 million outstanding balance under the Company’s Revolving Credit Facility, $310.7 million of the 2011 Term Loan, and $189.3 million of the 2012-2 Term Loan under the Company’s Senior Credit Agreement. The rest of the net proceeds was used to satisfy unhedged obligations in connection with the conversion or May 1, 2013 maturity of the Company’s 1.875% Convertible Senior Notes due 2013.

1.875% Convertible Senior Notes due 2013

On May 16, 2008, the Company issued $550.0 million of its 1.875% Convertible Senior Notes (the “1.875% Notes”). Interest is payable semi-annually on May 1 and November 1, and the Notes matured on May 1, 2013. The Notes were convertible, at the holder’s option, into shares of the Company’s Class A common stock, at an initial conversion rate of 24.1196 shares of Class A common stock per $1,000 principal amount of 1.875% Notes (subject to certain customary adjustments), which is equivalent to an initial conversion price of approximately $41.46 per share or a 20% conversion premium based on the last reported sale price of $34.55 per share of Class A common stock on the Nasdaq Global Select Market on May 12, 2008, the purchase agreement date.

Prior to the final settlement period, which began on February 22, 2013, the Company received conversion notices with respect to $18.1 million in principal of the 1.875% Notes of which $5.3 million were settled during the first quarter of 2013. These notes were converted and settled with the issuance of 437,134 shares of SBA common stock of which 128,332 shares related to the first quarter of 2013. In connection with these conversions, the convertible note hedges on the notes converted and the related common stock warrants were automatically exercised. As a result, the Company received a net 71,054 shares of SBA common stock of which 20,616 shares were received during the first quarter of 2013.

On February 1, 2013, SBA provided notice to the trustee and holders of its 1.875% Notes that it elected to settle 100% of its future conversion obligations pursuant to the Indenture governing the 1.875% Notes in cash, effective February 4, 2013.

From February 4, 2013 to April 29, 2013, the Company received additional conversion notices from holders of an aggregate of $450.6 million in principal of the 1.875% Notes (excluding $81.2 million in principal of the Notes held by a subsidiary of the Company which were also converted). Pursuant to the terms of the Indenture, these notes were converted at a price of $1,764.02 per $1,000 of principal or an aggregate of $794.8 million. The remaining $142,000 aggregate principal amount of 1.875% Notes that was not converted matured on May 1, 2013 and were settled in cash at principal plus accrued interest.

Concurrently with the settlement of the Company’s conversion obligation, the Company settled the convertible note hedges that the Company had initially purchased at the time the outstanding 1.875% Notes were issued. In connection with the settlement of these options, the Company received an aggregate of $182.9 million in cash of which $45.2 million was received during the three months ended March 31, 2013.

As of May 1, 2013, common stock warrants remain outstanding with respect to13,156,497 underlying shares of the Company’s Class A common stock. These warrants have a strike price of $67.37 per share and expire evenly over a 60 day trading period beginning August 1, 2013.

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 the Company’s 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 our 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 12.9%. As of March 31, 2013 and December 31, 2012, the carrying amount of the equity component related to the 4.0% Notes was $169.0 million.

The 4.0 % Notes are reflected in long-term debt in the Company’s Consolidated Balance Sheets at carrying value. The following table summarizes the balances for the 4.0% Notes:


	As of			As of
	March 31, 2013			December 31, 2012
	(in thousands)
Principal balance	$	499,983		$	499,987
Debt discount		(60,260	)		(69,236	)

Carrying value	$	439,723		$	430,751

The 4.0% Notes are convertible only under the following circumstances:

•

during any calendar quarter, if the last reported sale price of the Company’s Class A common stock for at least 20 trading days in the 30 consecutive trading day period ending on the last trading day of the preceding calendar quarter is more than 130% of the applicable conversion price per share of Class A common stock on the last day of such preceding calendar quarter,

•

during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each day in the measurement period was less than 95% of the product of the last reported sale price of Class A common stock and the applicable conversion rate,

•

if specified distributions to holders of Class A common stock are made or specified corporate transactions occur, and

•

at any time on or after July 22, 2014.

As of March 31, 2013, the 4.0% Notes were convertible by the noteholders.

Upon conversion, the Company has the right to settle its conversion obligation in cash, shares of Class A common stock or a combination of cash and shares of its Class A common stock. From time to time, upon notice to the holders of the Notes, the Company may change its election regarding the form of consideration that it will use to settle its conversion obligation; provided, however, that the Company is not permitted to change its settlement election after July 21, 2014 for the 4.0% Notes.

During the three months ended March 31, 2013, 3 notes valued at $1,000 per note for the 4.0% Notes were settled in shares of our Class A common stock and cash for fractional shares. In connection with the conversion, the Company received the applicable shares of stock due under the associated proportionate bond hedges. In addition, the Company received 3 conversion notices for the 4.0% Notes totaling 10 notes valued at $1,000 per note during the first quarter of 2013. These notes will be settled in shares of its Class A common stock and cash for fractional shares during the second quarter of 2013.

Senior Notes

8.0% Senior Notes and 8.25% Senior Notes

On July 24, 2009, the Company’s wholly-owned subsidiary, SBA Telecommunications, LLC (formerly known as SBA Telecommunications, Inc.) (“Telecommunications”), issued $750.0 million of unsecured senior notes (the “Senior Notes”), $375.0 million of which were due August 15, 2016 (the “8.0% Notes”) and $375.0 million of which are due August 15, 2019 (the “8.25% Notes”). The 8.0% Notes had an interest rate of 8.00% per annum and were issued at a price of 99.330% of their face value. 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 on each of the Senior Notes was due semi-annually on February 15 and August 15 of each year beginning on February 15, 2010. The Company incurred deferred financing fees of approximately $16.5 million in relation to this transaction which were being amortized through the anticipated repayment date of each of the Senior Notes. Net proceeds of this offering were $727.8 million after deducting expenses and the original issue discount. The Company was amortizing the debt discount on the Senior Notes utilizing the effective interest method over the life of the 8.0% Notes and 8.25% Notes.

On April 13, 2012, the Company used the proceeds of an equity offering to redeem $131.3 million in aggregate principal amount of its 8.0% Notes and $131.3 million in aggregate principal amount of its 8.25% Notes and to pay $21.3 million as a premium on the redemption of the notes. Additionally, the Company wrote off $1.5 million and $4.3 million of debt discount and deferred financing fees, respectively, related to the redemption of the notes.

On August 29, 2012, the Company redeemed the remaining $243.8 million principal balance of the 8.0% Notes plus paid $14.6 million in applicable premium on the redemption of the notes. Additionally, the Company wrote off $1.0 million and $3.4 million of debt discount and deferred financing fees, respectively, related to the redemption of the notes.

As of March 31, 2013, the principal balance of the 8.25% Notes was $243.8 million and the carrying value was $242.2 million.

5.75% Senior Notes

On July 13, 2012, Telecommunications issued $800.0 million of unsecured senior notes (the “5.75% Notes”) due July 15, 2020. The 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 approximately $13.9 million in relation to this transaction which are being amortized through the maturity date. The Company used the net proceeds from this offering to (1) repay all amounts outstanding under the Mobilitie Bridge Loan and (2) repay all amounts outstanding under its Revolving Credit Facility. The remaining proceeds were used for general corporate purposes.

In connection with the issuance of the 5.75% Notes, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with J.P. Morgan Securities LLC, as representative of the Initial Purchasers. Pursuant to the terms of the Registration Rights Agreement, the Company and Telecommunications agreed to use their respective reasonable best efforts to file and have declared effective a registration statement with respect to an offer to exchange the 5.75% Notes for new notes guaranteed by the Company registered under the Securities Act of 1933, as amended (the “Securities Act”), on or prior to July 8, 2013. If the Company fails to satisfy certain filing and other obligations with respect to the exchange, the Company will be obligated to pay additional interest of 0.25% per annum for the first 90-day period and an additional 0.25% per annum with respect to each subsequent 90-day period thereafter, until the Company’s registration obligations are fulfilled, up to a maximum of 1.00% per annum.

5.625% Senior Notes

On September 28, 2012, the Company issued $500.0 million of unsecured senior notes (the “5.625% Notes”) due October 1, 2019. 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 October 1 and April 1 of each year beginning on April 1, 2013. The Company incurred deferred financing fees of approximately $8.4 million in relation to this transaction which are being amortized through the maturity date. The Company used the proceeds from the issuance of the 5.625% Notes to pay a portion of the cash consideration in the TowerCo II Holdings LLC acquisition.

In connection with the issuance of the 5.625% Notes, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with J.P. Morgan Securities LLC, as representative of the Initial Purchasers. Pursuant to the terms of the Registration Rights Agreement, the Company agreed to use its reasonable best efforts to file and have declared effective a registration statement with respect to an offer to exchange the 5.625% Notes for new notes registered under the Securities Act of 1933, as amended (the “Securities Act”), on or prior to September 23, 2013. If the Company fails to satisfy certain filing and other obligations with respect to the exchange, the Company will be obligated to pay additional interest of 0.25% per annum for the first 90-day period and an additional 0.25% per annum with respect to each subsequent 90-day period thereafter, until the Company’s registration obligations are fulfilled, up to a maximum of 1.00% per annum.