Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Debt

Note 8 Debt

Revolving Credit Agreements

TDS has a revolving credit agreement with maximum borrowing capacity of $400 million. Amounts under the agreement may be borrowed, repaid and reborrowed from time to time until maturity in July 2026. During the three months ended March 31, 2023, TDS borrowed $100 million under its revolving credit agreement. Borrowings under the TDS revolving credit agreement bear interest at a rate of Secured Overnight Financing Rate (SOFR) plus 1.60%. As of March 31, 2023, the outstanding borrowings under the agreement were $101 million, including letters of credit, and the unused borrowing capacity under the agreement was $299 million.

In April 2023, TDS repaid $50 million under the agreement.

Export Credit Financing Agreement

TDS has a $150 million term loan credit facility with Export Development Canada to finance (or refinance) imported equipment, including equipment purchased prior to entering the term loan facility agreement. During the three months ended March 31, 2023, TDS borrowed $100 million under its export credit financing agreement. Borrowings bear interest at a rate of SOFR plus 1.60% and are due and payable in December 2027. As of March 31, 2023, the outstanding borrowings were $150 million, which is the full amount available under the agreement.

Receivables Securitization Agreement

UScellular, through its subsidiaries, has a receivables securitization agreement to permit securitized borrowings using its equipment installment plan receivables. Amounts under the agreement may be borrowed, repaid and reborrowed from time to time until March 2024. Unless the agreement is amended to extend the maturity date, repayments based on receivable collections commence in April 2024. The outstanding borrowings bear interest at a rate of the lender's cost of funds (which has historically tracked closely to SOFR) plus 0.90%. During the three months ended March 31, 2023, UScellular borrowed $115 million under its receivables securitization agreement. As of March 31, 2023, the outstanding borrowings under the agreement were $390 million and the unused borrowing capacity was $60 million, subject to sufficient collateral to satisfy the asset borrowing base provisions of the agreement. As of March 31, 2023, the USCC Master Note Trust held $598 million of assets available to be pledged as collateral for the receivables securitization agreement.

In April 2023, UScellular repaid $75 million under the agreement.

Repurchase Agreement

UScellular, through a subsidiary (the repo subsidiary), has a repurchase agreement to borrow up to $200 million, subject to the availability of eligible equipment installment plan receivables and the agreement of the lender. In January 2023, UScellular amended the repurchase agreement to extend the expiration date to January 2024. The outstanding borrowings bear interest at a rate of the lender's cost of funds (which has historically tracked closely to SOFR) plus 1.35%. There were no significant changes to other terms of the repurchase agreement. Outstanding borrowings are included in Other current liabilities in the Consolidated Balance Sheet. During the three months ended March 31, 2023, the repo subsidiary repaid $60 million under the repurchase agreement. As of March 31, 2023, there were no outstanding borrowings under the agreement and the unused borrowing capacity was $200 million. As of March 31, 2023, UScellular held $365 million of assets available for inclusion in the repurchase facility; these assets are distinct from the assets held by the USCC Master Note Trust for UScellular's receivables securitization agreement.

Financial Covenants

The TDS and UScellular revolving credit agreements, term loan agreements, export credit financing agreements and the UScellular receivables securitization agreement require TDS or UScellular, as applicable, to comply with certain affirmative and negative covenants, which include certain financial covenants. In March 2023, the agreements were amended and TDS and UScellular are required to maintain the Consolidated Leverage Ratio as of the end of any fiscal quarter at a level not to exceed the following: 4.25 to 1.00 from January 1, 2023 through March 31, 2024; 4.00 to 1.00 from April 1, 2024 through March 31, 2025; 3.75 to 1.00 from April 1, 2025 and thereafter. TDS and UScellular are also required to maintain the Consolidated Interest Coverage Ratio at a level not lower than 3.00 to 1.00 as of the end of any fiscal quarter. TDS and UScellular believe they were in compliance as of March 31, 2023 with all such financial covenants.