Sec Form 13D Filing - SoftBank Group Capital Ltd filing for T-Mobile US Inc. (TMUS) - 2020-04-02

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

---

---

---

Item 1.

Security and Issuer

Item 2.

Identity and Background.

The information set forth in Item 6 of this Schedule 13D is hereby incorporated by reference.

Purpose of the Transaction

(a)-(b)     The information contained in the cover pages of this Schedule 13D and the information set forth in Item 4 is incorporated herein by reference.  SBGC beneficially owns 304,606,049 shares of T-Mobile Common Stock, which represents approximately 24.7% of the shares of T-Mobile Common Stock outstanding as of immediately following the Merger Transactions (as defined in Item 6) and after giving effect to the SoftBank Disposition (as defined in Item 6). SBGC is a wholly owned indirect subsidiary of SoftBank.  As a result, SoftBank may be deemed to beneficially own the shares of T-Mobile Common Stock beneficially owned by SBGC.

In addition, as a result of the Proxy (as defined in Item 6) granted by SoftBank in favor of Deutsche Telekom pursuant to the Proxy Agreement (as defined in Item 6), each of the Separately Filing Group Members may be deemed to beneficially own all the T-Mobile Common Stock beneficially owned by the Reporting Persons.  Further, as a result of the Proxy Agreement, each of the Reporting Persons may be deemed to beneficially own all the T-Mobile Common Stock beneficially owned by the Separately Filing Group Members.  The filing of this Schedule 13D shall not be construed as an admission that any Reporting Person is the beneficial owner of any of the shares of T-Mobile Common Stock that such Reporting Person may be deemed to beneficially own.  Without limiting the foregoing, each Reporting Person disclaims beneficial ownership of the shares held by any other Reporting Person or any of the Separately Filing Group Members.  In addition, the filing of this Schedule 13D shall not be construed as an admission that any partner, member, director, officer or affiliate of any Reporting Person is the beneficial owner of any of the shares of T-Mobile Common Stock that such partner, member, director, officer or affiliate may be deemed to beneficially own.

(c)          Other than as described in this Item 5, neither the Reporting Persons nor, to the Reporting Persons’ knowledge, the Separately Filing Group Members or any of the persons set forth on Appendices A-1 and A-2, has effected any transaction in T-Mobile Common Stock during the past sixty (60) days.

(d)          To the best knowledge of the Reporting Persons, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds of the sale of, the securities that are the subject of this Schedule 13D, other than, with respect to the shares of T-Mobile Common Stock beneficially owned by the Separately Filing Group Members that are subject to the Proxy.

(e)          Not applicable.

Pursuant to the Business Combination Agreement, dated as of April 29, 2018 (as amended, the “Business Combination Agreement”), by and among T-Mobile, Sprint Corporation, a Delaware corporation (“Sprint”), Huron Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of T-Mobile (“Merger Company”), Superior Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of Merger Company (“Merger Sub”), Starburst I, Inc., a Delaware corporation (“Starburst”), Galaxy Investment Holdings, Inc., a Delaware corporation (“Galaxy” and, together with Starburst, the “SoftBank US HoldCos”), and for the limited purposes set forth therein, Deutsche Telekom AG, an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany (“Deutsche Telekom”), Deutsche Telekom Holding B.V., a besloten vennootschap met beperkte aansprakelijkheid organized and existing under the laws of the Netherlands, and SoftBank, on April 1, 2020 (the “Closing Date”), (i) the SoftBank US HoldCos merged with and into Merger Company, with Merger Company continuing as the surviving entity and as a wholly owned subsidiary of T-Mobile (the “HoldCo Mergers”), and (ii) immediately following the HoldCo Mergers, Merger Sub merged with and into Sprint, with Sprint continuing as the surviving corporation and as a wholly owned indirect subsidiary of T Mobile (the “Merger” and, together with the HoldCo Mergers, the “Merger Transactions”). In connection with the completion of the Merger Transactions, the parties to the Business Combination Agreement waived the condition to closing set forth in the Business Combination Agreement with respect to the final consent of the California Public Utilities Commission (the “CPUC”), to the extent required, such that all regulatory approvals required for the Merger Transactions to be completed on April 1, 2020 were satisfied or waived as of such date. The parties entered into this waiver without any admission as to whether such final consent was required in connection with the Merger Transactions, following the release of the CPUC’s proposed decision to approve the Merger on March 11, 2020.

In addition, immediately following the BCA Effective Time on the Closing Date, pursuant to the Letter Agreement, dated as of February 20, 2020 (the “Letter Agreement”), by and among T-Mobile, SoftBank and Deutsche Telekom, SBGC surrendered to T-Mobile, for no additional consideration, an aggregate of 48,751,557 shares (the “SoftBank Specified Shares Amount”) of T-Mobile Common Stock (the “SoftBank Disposition”).

 

The Letter Agreement further provides that if the trailing 45-day volume-weighted average price per share of T-Mobile Common Stock on the NASDAQ Global Select Market (the “NASDAQ”) is equal to or greater than $150.00 at any time during the period commencing on the second anniversary of the Closing Date and ending on December 31, 2025, T-Mobile will issue to SoftBank, for no additional consideration, a number of shares of T-Mobile Common Stock equal to the SoftBank Specified Shares Amount (the “Additional Shares”), subject to the terms and conditions set forth in the Letter Agreement.

 

As of immediately following the Merger Transactions and after giving effect to the SoftBank Disposition, Deutsche Telekom and SoftBank held approximately 43% and 24%, respectively, of the outstanding T-Mobile Common Stock, with the remaining approximately 33% of the outstanding T-Mobile Common Stock held by public stockholders, in each case on a fully diluted basis.  The T-Mobile Common Stock continues to trade on the NASDAQ under the ticker symbol “TMUS”.

 

The foregoing description of the Merger Transactions and the SoftBank Disposition does not purport to be complete and is qualified in its entirety by reference to the Business Combination Agreement, which is filed as Exhibit 1 to this Schedule 13D, as amended by Amendments No. 1 and No. 2 to the Business Combination Agreement, which are filed as Exhibits 2 and 3, respectively, to this Schedule 13D, and the Letter Agreement, which is filed as Exhibit 4 to this Schedule 13D.

 

Amended and Restated Stockholders’ Agreement

 

Pursuant to the Business Combination Agreement, on April 1, 2020, T-Mobile, Deutsche Telekom and SoftBank entered into an amendment an d restatement (the “Amended and Restated Stockholders’ Agreement”) of the Stockholder’s Agreement, dated as of April 30, 2013, by and between T-Mobile and Deutsche Telekom.

 

The Amended and Restated Stockholders’ Agreement includes provisions setting forth the rights of Deutsche Telekom and SoftBank to designate individuals to be nominees for election to T-Mobile’s board of directors (the “Board”) and any committees thereof.  Pursuant to the Amended and Restated Stockholders’ Agreement, at all times when Deutsche Telekom and SoftBank beneficially own at least 50% of the outstanding T-Mobile Common Stock and any other securities of T-Mobile that are entitled to vote in the election of directors (collectively, “T-Mobile Voting Securities”) in the aggregate and any such T-Mobile Voting Security continues to be subject to the Proxy (as defined below), (i) the Board will consist of a total of 14 directors, (ii) each of Deutsche Telekom and SoftBank (except, in the case of SoftBank, if it beneficially owns less than a certain minimum percentage of the outstanding T-Mobile Voting Securities (10% if the condition giving rise to SoftBank’s right to the Additional Shares has been satisfied, or 9% if it has not)) has the right to designate a specified number of nominees for election to the Board in accordance with the terms of the Amended and Restated Stockholders Agreement, subject to certain requirements, including requirements with respect to the “independence” of certain nominees under applicable stock exchange listing standards and rules of the SEC, (iii) the chairperson of the Board will be a Deutsche Telekom designee and (iv) the Board will have certain committees, which committees will be comprised in the manner specified in the Amended and Restated Stockholders’ Agreement.  The Amended and Restated Stockholders’ Agreement further provides that at all times when Deutsche Telekom and SoftBank beneficially own less than 50% of the outstanding T-Mobile Voting Securities in the aggregate or no T-Mobile Voting Security continues to be subject to the Proxy, then, in each case, each of Deutsche Telekom and SoftBank has the right to designate a number of nominees for election to the Board equal to the percentage of T-Mobile Voting Stock that it beneficially owns (provided that such percentage is 10% or more) multiplied by the number of directors on the Board, rounded to the nearest whole number greater than zero.

Based on the percentages of T-Mobile Common Stock beneficially owned by Deutsche Telekom and SoftBank as of immediately following the Merger Transactions and after giving effect to the SoftBank Disposition, under the Amended and Restated Stockholders’ Agreement, Deutsche Telekom has the right to designate nine individuals to be nominees for election to the Board and SoftBank has the right to designate four individuals to be nominees for election to the Board.

 

In accordance with the terms of the Business Combination Agreement and the Amended and Restated Stockholders’ Agreement, as modified by certain transitional arrangements agreed to between the parties, as of immediately following the BCA Effective Time, the Board consists of a total of 14 directors, including nine directors designated by Deutsche Telekom, three directors designated by SoftBank, and each of John J. Legere (who will not be deemed to be a designee of Deutsche Telekom or of SoftBank for purposes of the Amended and Restated Stockholders’ Agreement) and G. Michael Sievert.

 

In addition, pursuant to the Amended and Restated Stockholders’ Agreement and T-Mobile’s amended and restated certificate of incorporation, (i) as long as Deutsche Telekom beneficially owns 30% or more of the outstanding T-Mobile Voting Securities, T-Mobile will not take certain actions without Deutsche Telekom’s prior written consent, including (a) incurring indebtedness above certain levels based on a specified debt to cash flow ratio, (b) taking any action that would cause a default under any instrument evidencing indebtedness of Deutsche Telekom or its affiliates, (c) acquiring or disposing of assets or entering into mergers or similar acquisitions in excess of $1.0 billion, (d) changing the size of the Board, (e) subject to certain exceptions, issuing equity of 10% or more of the then-outstanding shares of T-Mobile Common Stock, or issuing equity to redeem debt held by Deutsche Telekom, (f) repurchasing or redeeming equity securities or making any extraordinary or in-kind dividend other than on a pro rata basis, or (g) making certain changes involving the Chief Executive Officer of T-Mobile, and (ii) as long as SoftBank beneficially owns 22.5% or more of the outstanding T-Mobile Voting Securities, T-Mobile will not take certain actions without SoftBank’s prior written consent, including (a) acquiring or disposing of assets or entering into mergers or similar acquisitions in excess of $1.0 billion (other than a Sale of the Company (as defined in the Amended and Restated Stockholders’ Agreement), for which the prior written consent of SoftBank will not be required, but for which SoftBank has a match right as set forth in the Amended and Restated Stockholders’ Agreement) or (b) subject to certain exceptions, issuing equity of 10% or more of the then-outstanding shares of T-Mobile Common Stock.  T-Mobile has also agreed not to amend its certificate of incorporation and bylaws in any manner that could adversely affect Deutsche Telekom’s or SoftBank’s rights under the Amended and Restated Stockholders’ Agreement for as long as the applicable stockholder beneficially owns 5% or more of the outstanding T-Mobile Voting Securities.

 

Pursuant to the Amended and Restated Stockholders’ Agreement, Deutsche Telekom, SoftBank and their respective affiliates are generally prohibited from acquiring T-Mobile Voting Securities that would cause their collective beneficial ownership to exceed 80.1% of the outstanding T Mobile Voting Securities unless such acquiring stockholder makes an offer to acquire all of the then-remaining outstanding shares of T-Mobile Common Stock at the same price and on the same terms and conditions as the proposed acquisition from all other stockholders of T-Mobile, which is either (i) accepted or approved by a majority of the directors on the Board, which majority includes a majority of the directors who are not affiliated with Deutsche Telekom or SoftBank under the terms of the Amended and Restated Stockholders’ Agreement (the “Required Approval”), or (ii) accepted or approved by holders (other than Deutsche Telekom, SoftBank and their respective affiliates) of a majority of the shares of T-Mobile Common Stock (other than shares held by Deutsche Telekom, SoftBank and their respective affiliates).  Each of Deutsche Telekom and SoftBank is also prohibited from transferring any shares of T-Mobile Common Stock in any transaction that would result in the transferee owning more than 30% of the outstanding shares of T-Mobile Common Stock unless the transfer is approved by the Board (including the Required Approval) or the transferee offers to acquire all of the then outstanding shares of T Mobile Common Stock at the same price and on the same terms and conditions as the proposed transfer.

 

So long as SoftBank beneficially owns 22.5% or more of the outstanding T-Mobile Voting Securities, the Amended and Restated Stockholders’ Agreement also provides SoftBank with a match right in connection with a possible sale of T-Mobile (whether initiated by T-Mobile or a third party).

The Amended and Restated Stockholders’ Agreement sets forth certain additional rights and obligations of each of Deutsche Telekom and SoftBank, including information rights, registration rights and non-competition restrictions.

 

The foregoing summary of the Amended and Restated Stockholders’ Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the Amended and Restated Stockholders’ Agreement, which is filed as Exhibit 5 hereto.

 

Proxy Agreement

 

Pursuant to the Business Combination Agreement, on April 1, 2020, Deutsche Telekom and SoftBank entered into a Proxy, Lock-up and ROFR Agreement (the “Proxy Agreement”).  The Proxy Agreement establishes between Deutsche Telekom and SoftBank certain rights and obligations in respect of the shares of T Mobile Common Stock owned by each of Deutsche Telekom, SoftBank and certain of their respective affiliates to enable Deutsche Telekom to consolidate T-Mobile into Deutsche Telekom’s financial statements following the completion of the Merger Transactions.  Pursuant to the Proxy Agreement, at any meeting of the stockholders of T-Mobile, the shares of T-Mobile Common Stock beneficially owned by SoftBank will be voted in the manner directed by Deutsche Telekom (the “Proxy”), which obligation will terminate upon the earliest of:  (i) with respect to each such share of T-Mobile Common Stock, the date on which such share is transferred to a third party in accordance with the terms of the Proxy Agreement, subject to certain exceptions, (ii) the date on which Deutsche Telekom owns 55% or more of the outstanding T-Mobile Voting Securities and (iii) the date on which Deutsche Telekom has transferred an aggregate number of shares representing 5% or more of the outstanding T-Mobile Common Stock as of immediately following the BCA Effective Time.  The Proxy Agreement also contains certain restrictions on the ability of each of SoftBank and Deutsche Telekom to transfer or acquire shares of T-Mobile Common Stock, including that each of SoftBank and Deutsche Telekom is not permitted to transfer its shares without the prior written consent of the other stockholder from and after the BCA Effective Time until the fourth anniversary of the BCA Effective Time, subject to certain exceptions, including for transfers of up to 5% of the T-Mobile Common Stock outstanding as of the BCA Effective Time beginning after the first anniversary of the BCA Effective Time and up to an additional 10% of the T-Mobile Common Stock outstanding as of the BCA Effective Time beginning after the second anniversary of the BCA Effective Time.  As a result of the Proxy Agreement, T-Mobile continues to be a “controlled company” for purposes of NASDAQ rules, which provides T-Mobile with exemptions from certain corporate governance requirements under NASDAQ rules.

 

The foregoing description of the Proxy Agreement is not complete and is qualified in its entirety by reference to the Proxy Agreement, which is filed as Exhibit 6 hereto.

 

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

APPENDIX A-1

 

EXECUTIVE OFFICERS AND DIRECTORS

OF

SOFTBANK GROUP CORP.

 

Set forth below is a list of each executive officer and director of SoftBank Group Corp. setting forth the citizenship, business address and present principal occupation or employment (and the name and address of any corporation or organization in which such employment is conducted) of each person.

 

 

 

APPENDIX A-2

 

EXECUTIVE OFFICERS AND DIRECTORS

OF

SOFTBANK GROUP CAPITAL LTD

 

Set forth below is a list of each executive officer and director of SoftBank Group Capital Ltd setting forth the citizenship, business address and present principal occupation or employment (and the name and address of any corporation or organization in which such employment is conducted) of each person.

 

APPENDIX B