NEW YORK-Leap Wireless International Inc. reported in a Securities and Exchange Commission filing that its Cricket Communications Inc. subsidiary filed a request on April 12 for a waiver of certain defaults and potential defaults under its credit agreement. The company previously noted that the failure to file its annual 10-K report by April 15 would result in an event of default under its $500 million term loan and $110 million revolving credit facility unless it received a waiver.
In a letter to its creditors, Cricket cited its ongoing review of cell site lease-related accounting practices as the reason for the delay in filing its 10-K. The review was initiated following an SEC requirement released in February with respect to certain lease accounting matters.
“We have worked closely with our auditors to review the lease accounting practices and related policies of Leap and Cricket since the letter was released,” Cricket wrote in the letter. “We have not yet concluded our analysis and, therefore, we do not expect to complete the annual financial statements for the year ended December 31, 2004, and file our annual report on Form 10-K by April 15.”
The company noted earlier this month that the review process was taking a considerable amount of time due to the more than 2,500 leases it had to review.
Cricket requested that the deadline for filing audited financial statements and compliance certificates for 2004 be extended until May 16, and that the deadline for filing similar statements for the first quarter of this year ended March 30 be extended until June 15.
Cricket also asked that any default that could occur under its current credit agreement if the company were to amend any previously reported financial statements be waived. The waiver would require that Cricket reports at least $217 million in earnings before interest, taxes, depreciation and amortization for the four quarters ended Sept. 30, 2004, instead of the current $219 million requirement and that total debt and liabilities be less than $10 million more than what was previously reported to its lenders.
Leap’s stock was trading down more than 2 percent early Wednesday at $25.75 per share.
