TELEPHONE & DATA SYSTEMS INC /DE/: entering into a material definitive agreement, creating a direct financial obligation or an obligation under an off-balance sheet arrangement of a registrant, financial statements and exhibits (Form 8 -K)

Item 1.01. Conclusion of a significant definitive agreement

On November 9, 2022 (Effective date), Telephone and Data Systems, Inc. (TDS) entered into a $150 million Credit Agreement (Credit Agreement) by and between TDS as Borrower and Export Development Canada as a lender.

The credit agreement provides TDS with a $150 million term credit facility to finance (or refinance) the purchase of goods and services (including goods and services purchased prior to the Effective Date) from Nokia OYJ.

Borrowings under the Credit Agreement bear interest, at TDS’ option, either at a Secured Overnight Funding Rate (SOFR) or at another base rate, plus, in each case, a margin applies.

The two financial commitments described below are included in the credit agreement:

1. The consolidated interest coverage ratio (the ratio of consolidated EBITDA to consolidated interest expense) may not be less than 3.00 to 1.00 at the end of any fiscal quarter.

2. The consolidated leverage ratio (the ratio of consolidated financial debt to consolidated EBITDA) cannot exceed 3.75 to 1.00 at the end of a fiscal quarter.

The term loan under the Credit Agreement is unsecured, subject to certain restrictions. In addition, certain wholly-owned subsidiaries act as guarantors under the credit agreement.

The Credit Agreement includes representations and warranties, covenants, events of default and other terms and conditions that are substantially similar to TDS’ existing term loan and revolving credit agreements.

A Change of Control, as that term is defined in the Credit Agreement, of TDS would constitute a default and entitle the Lender to demand repayment of all outstanding borrowings under the Credit Agreement.

The continued availability of the Credit Agreement requires TDS to comply with certain restrictive and positive covenants, to maintain the above financial ratios and to provide representations on certain matters at the time of each borrowing.

The credit agreement allows TDS to contract one or more loans totaling up to $150 million from the Effective Date until the earliest of the following dates: (a) April 9, 2023(b) the date of termination of the commitment, and (c) the date of termination of the lender’s commitment to make loans.

Amounts borrowed under the Credit Agreement will be due and payable on the earliest of the following dates: (i) the date of the acceleration of the obligations and (ii) the fifth anniversary of the first borrowing.

The foregoing brief description is qualified by reference to the copy of the Credit Agreement attached hereto as Schedule 4.1, which is incorporated herein by reference and identifies all Lenders.

The lender under the credit agreement also serves as mandated lead arranger and lender under a credit agreement for United States Cell Societya subsidiary of TDS.

Section 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant

The disclosure set forth above at 1.01 is incorporated by reference into this 2.03.

Section 9.01. Financial statements and supporting documents

(d)  Exhibits

Exhibit Number                 Description of Exhibits
4.1                              Credit Agreement, between TDS as Borrower and Export Development
                               Canada as Lender, dated as of November 9, 2022, including the form of
                               subsidiary Guaranty.
104                            Cover Page Interactive Data File - the cover page XBRL tags are
                               embedded within the Inline XBRL document.

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