Nextel Communications Inc. reported in a government filing that its Nextel Operations Inc. subsidiary, U.S. Bank National Association, JP Morgan Chase Bank N.A. and other issuing banks have issued a $2.5 billion standby letter of credit in connection with Nextel’s 800 MHz Relocation Trust Agreement.
Nextel, which is in the process of being acquired by Sprint Corp., said in the Securities and Exchange Commission Form 8-K that it obtained the letter of credit to provide assurance that funds will be available to pay the relocation costs of the incumbent users of the 800 MHz spectrum that are to be relocated as part of Nextel’s rebanding efforts. Those plans will provide Nextel with 4 megahertz of spectrum in the 700 MHz band and 4.5 MHz in the 800 MHz band in exchange for 10 megahertz of spectrum at 1.9 GHz.
The filing added that the letter of credit provides for renewals and extensions, but will expire after June 26, 2009. Nextel also noted that the letter of credit provides for periodic reductions in the amount of the letter of credit that would result in a corresponding increase in the amount of revolving loan commitments available to Nextel.
Nextel has said it expects most of the rebanding efforts to be completed in three years.
