NII HOLDINGS INC - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - December 18, 2019

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EX-10.2 - EXHIBIT 10.2 - NII HOLDINGS INCclosingexhibit102.htm
EX-99.2 - EXHIBIT 99.2 - NII HOLDINGS INCclosingexhibit992.htm
EX-99.1 - EXHIBIT 99.1 - NII HOLDINGS INCclosingexhibit991.htm
EX-10.1 - EXHIBIT 10.1 - NII HOLDINGS INCclosingexhibit101.htm
EX-4.1 - EXHIBIT 4.1 - NII HOLDINGS INCclosingexhibit41.htm
8-K - FORM 8-K - NII HOLDINGS INCbrazilsaleclosingandprofor.htm
Exhibit 99.3


NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Unaudited

The following unaudited pro forma condensed consolidated financial information is based on the historical consolidated financial statements of NII Holdings, Inc., which we refer to as NII, including certain pro forma adjustments. This financial information has been prepared to illustrate the pro forma effect of the completion of the previously announced sale of NII's wireless operations in Brazil, or Nextel Brazil, in accordance with the terms of the purchase agreement, dated March 18, 2019, by and among América Móvil, S.A.B. de C.V., or AMX, NII International Holdings S.à r.l., AI Brazil Holdings B.V., or AI Brazil, and NII, as amended from time to time. The purchase price was $905.0 million. After making adjustments pursuant to the purchase agreement to deduct $491.6 million of net debt and a $3.7 million selling and marketing spending shortfall compared to budget, and to add a $30.3 million reimbursement of capital expenditures and a $16.9 million working capital adjustment, the net purchase price at closing was $456.9 million. In consideration for the sale of its 27.55% ownership interest in Nextel Brazil, AI Brazil received a $2.5 million preferred return and its $125.2 million pro rata share of the net purchase price. After deducting these amounts, NII's share of the net purchase price was $329.2 million. Pursuant to the terms of the purchase agreement, $30.0 million of the net proceeds due to NII was placed into an 18-month escrow account to secure NII's indemnification obligations under the purchase agreement with AMX and Citibank, N.A., as escrow agent. In addition, pursuant to the indenture agreement, dated August 14, 2018, between NII and Wilmington Trust, National Association, as trustee, that governs NII's 4.25% convertible senior notes due 2023, $134.8 million of the net proceeds due to NII was placed into an escrow account to secure NII's obligations under the indenture. After taking into account the amounts placed into escrow and accounting for a $1.9 million upward adjustment for a decrease in estimated accrued tax contingencies pursuant to the purchase agreement, the net cash proceeds to NII were $166.3 million.

This unaudited pro forma condensed consolidated financial information gives effect to the pro forma adjustments necessary to reflect the sale of Nextel Brazil as if it had occurred as of the beginning of the earliest period presented in the pro forma condensed consolidated statements of operations for each of the years ended December 31, 2016, 2017 and 2018, and as of September 30, 2019 in the pro forma condensed consolidated balance sheet.

The unaudited pro forma condensed consolidated financial information contained herein has been prepared based upon available information and management estimates. Actual amounts may differ from these estimated amounts. In addition, this unaudited pro forma condensed consolidated financial information is not necessarily indicative of the financial position or results of operations that might have occurred had the sale of Nextel Brazil occurred as of January 1, 2016 or September 30, 2019, respectively.

This unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements, notes to the consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our annual report on Form 10-K for the year ended December 31, 2018 and the condensed consolidated financial statements, notes to the condensed consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our quarterly reports on Form 10-Q for the periods ended March 31, 2019, June 30, 2019 and September 30, 2019.


















NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2019
(in thousands, except par values)
Unaudited

 
As Filed
 
Pro Forma Adjustments for Activity of Business and Net Assets Disposed
 
Unaudited Pro Forma
 
 
 
 
 
 
ASSETS
Current assets
 

 
 

 
 
Cash and cash equivalents
$
29,331

 
$
166,925

(a)
$
196,256

Cash in escrow
103,435

 
—

 
103,435

Prepaid expenses and other
3,258

 
(600
)
(b)
2,658

Assets held for sale
281,950

 
(281,950
)
(c)
—

Total current assets
417,974

 
(115,625
)
 
302,349

Other assets
2,136

 
164,750

(d)
166,886

Assets held for sale
833,199

 
(833,199
)
(c)
—

Total assets
$
1,253,309

 
$
(784,074
)
 
$
469,235

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities
 

 
 

 
 
Accounts payable, accrued expenses and other
$
21,083

 
$
28,792

(e)
$
49,875

Current portion of long-term debt
—

 
115,000

(f)
115,000

Liabilities held for sale
348,878

 
(348,878
)
(c)
—

    Total current liabilities
369,961

 
(205,086
)
 
164,875

Long-term debt
77,301

 
(77,301
)
(g)
—

Other long-term liabilities
400

 
—

 
400

Liabilities held for sale
1,032,801

 
(1,032,801
)
(c)
—

      Total liabilities
1,480,463

 
(1,315,188
)
 
165,275

Stockholders’ (deficit) equity
 

 
 

 
 
Undesignated preferred stock, par value $0.001, 10,000 shares authorized, no shares issued or outstanding 
—

 
—

 
—

Common stock, par value $0.001, 140,000 shares authorized, 102,836
  shares issued and outstanding
103

 
—

 
103

Paid-in capital
2,129,087

 
3,325

(h)
2,132,412

Accumulated deficit
(2,287,782
)
 
459,227

(i)
(1,828,555
)
Accumulated other comprehensive loss
4,955

 
(4,955
)
(j)
—

Total NII stockholders’ (deficit) equity
(153,637
)
 
457,597

 
303,960

Noncontrolling interest
(73,517
)
 
73,517

 
—

Total (deficit) equity
(227,154
)
 
531,114

 
303,960

    Total liabilities and stockholders’ (deficit) equity
$
1,253,309

 
$
(784,074
)
 
$
469,235





NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2018
(in thousands, except per share amounts)
Unaudited

 
As Filed
 
Pro Forma Adjustments for Activity of Business and Net Assets Disposed
 
Unaudited Pro Forma
Operating revenues
 

 
 

 
 
Service and other revenues
$
605,492

 
$
(605,470
)
(k)
$
22

Handset and accessory revenues
15,205

 
(15,205
)
(k)
—

 
620,697

 
(620,675
)
 
22

Operating expenses
 

 
 

 
 
Cost of service (exclusive of depreciation and amortization included below)
287,598

 
(287,598
)
(l)
—

Cost of handsets and accessories
18,571

 
(18,571
)
(l)
—

Selling, general and administrative
308,828

 
(292,642
)
(l)
16,186

Impairment, restructuring and other charges, net
18,949

 
(18,597
)
(l)
352

Depreciation
15,119

 
(15,119
)
(l)
—

Amortization
13,497

 
(13,497
)
(l)
—

 
662,562

 
(646,024
)
 
16,538

Operating loss
(41,865
)
 
25,349

 
(16,516
)
Other (expense) income
 

 
 

 
 
Interest expense, net
(100,513
)
 
96,306

(m)
(4,207
)
Interest income
12,357

 
(11,195
)
(k)
1,162

Foreign currency transaction losses, net
(49,008
)
 
49,003

(l)
(5
)
Other (expense) income, net
(7,217
)
 
13,549

(l)
6,332

 
(144,381
)
 
147,663

 
3,282

Loss from continuing operations before income taxes
(186,246
)
 
173,012

 
(13,234
)
Income tax benefit
—

 
—

 
—

Net loss from continuing operations
$
(186,246
)
 
$
173,012

 
$
(13,234
)
 
 
 
 
 
 
Net loss from continuing operations per common share, basic and diluted
$
(1.86
)
 
$
1.71

(o)
$
(0.15
)
 
 
 
 
 
 
Weighted average number of common shares outstanding, basic and diluted
100,675

 
—

 
100,675




NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2017
(in thousands, except per share amounts)
Unaudited

 
As Filed
 
Pro Forma Adjustments for Activity of Business and Net Assets Disposed
 
Unaudited Pro Forma
Operating revenues
 

 
 

 
 
Service and other revenues
$
848,806

 
$
(848,700
)
(k)
$
106

Handset and accessory revenues
21,888

 
(21,888
)
(k)
—

 
870,694

 
(870,588
)
 
106

Operating expenses
 

 
 

 
 
Cost of service (exclusive of depreciation and amortization included below)
370,435

 
(370,435
)
(l)
—

Cost of handsets and accessories
40,207

 
(40,207
)
(l)
—

Selling, general and administrative
510,168

 
(488,050
)
(l)
22,118

Impairment, restructuring and other charges, net
175,358

 
(174,098
)
(l)
1,260

Depreciation
20,451

 
(20,451
)
(l)
—

Amortization
14,995

 
(14,995
)
(l)
—

 
1,131,614

 
(1,108,236
)
 
23,378

Operating loss
(260,920
)
 
237,648

 
(23,272
)
Other (expense) income
 

 
 

 
 
Interest expense, net
(118,605
)
 
118,605

(m)
—

Interest income
41,507

 
(40,950
)
(k)
557

Foreign currency transaction losses, net
(1,271
)
 
1,260

(l)
(11
)
Other (expense) income, net
(7,485
)
 
7,935

(l)
450

 
(85,854
)
 
86,850

 
996

Loss from continuing operations before income taxes
(346,774
)
 
324,498

 
(22,276
)
Income tax benefit
6,347

 
(568
)
(n)
5,779

Net loss from continuing operations
$
(340,427
)
 
$
323,930

 
$
(16,497
)
 
 
 
 
 
 
Net loss from continuing operations per common share, basic and diluted
$
(3.40
)
 
$
3.22

(o)
$
(0.18
)
 
 
 
 
 
 
Weighted average number of common shares outstanding, basic and diluted
100,332

 
—

 
100,332




NII HOLDINGS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2016
(in thousands, except per share amounts)
Unaudited

 
As Filed
 
Pro Forma Adjustments for Activity of Business and Net Assets Disposed
 
Unaudited Pro Forma
Operating revenues
 

 
 

 
 
Service and other revenues
$
963,209

 
$
(963,041
)
(k)
$
168

Handset and accessory revenues
21,837

 
(21,837
)
(k)
—

 
985,046

 
(984,878
)
 
168

Operating expenses
 

 
 

 
 
Cost of service (exclusive of depreciation and amortization included below)
364,648

 
(364,648
)
(l)
—

Cost of handsets and accessories
29,273

 
(29,273
)
(l)
—

Selling, general and administrative
560,760

 
(526,097
)
(l)
34,663

Impairment, restructuring and other charges, net
1,384,811

 
(1,340,610
)
(l)
44,201

Depreciation
135,429

 
(132,850
)
(l)
2,579

Amortization
36,954

 
(35,837
)
(l)
1,117

 
2,511,875

 
(2,429,315
)
 
82,560

Operating loss
(1,526,829
)
 
1,444,437

 
(82,392
)
Other (expense) income
 

 
 

 
 
Interest expense, net
(113,732
)
 
113,732

(m)
—

Interest income
37,689

 
(36,818
)
(k)
871

Foreign currency transaction gains (losses), net
76,615

 
(78,008
)
(k)
(1,393
)
Other expense, net
(10,514
)
 
9,613

(l)
(901
)
 
(9,942
)
 
8,519

 
(1,423
)
Loss from continuing operations before income taxes
(1,536,771
)
 
1,452,956

 
(83,815
)
Income tax benefit
2,892

 
2

(n)
2,894

Net loss from continuing operations
$
(1,533,879
)
 
$
1,452,958

 
$
(80,921
)
 
 
 
 
 
 
Net loss from continuing operations per common share, basic and diluted
$
(15.32
)
 
$
14.52

(o)
$
(0.80
)
 
 
 
 
 
 
Weighted average number of common shares outstanding, basic and diluted
100,098

 
—

 
100,098




Note 1.
Basis of Presentation

The accompanying unaudited pro forma consolidated information gives effect to the pro forma adjustments necessary to reflect the sale of Nextel Brazil as if it had occurred as of the beginning of the earliest period presented in the pro forma condensed consolidated statements of operations for each of the years ended December 31, 2018, 2017 and 2016, and as of September 30, 2019 in the pro forma condensed consolidated balance sheet.

Note 2.
Pro Forma Adjustments

The unaudited pro forma condensed consolidated statements of operations and pro forma condensed consolidated balance sheet reflect the effect of the following pro forma adjustments:

(a)
Reflects the net effect of the proceeds received upon completion of the sale of Nextel Brazil and includes capital expenditures, working capital adjustments and selling and marketing adjustments, net of a deposit placed into escrow in accordance with the indenture agreement governing our 4.25% convertible senior notes due 2023 and cash placed into escrow to secure specified indemnity obligations.
Purchase price
$
905,000

Add: capital expenditures reimbursement
30,251

Add: net working capital reimbursement
16,924

Less: selling and marketing adjustment
(3,721
)
Aggregate purchase price
948,454

Less: net financial debt, excluding capital leases
(491,598
)
Net purchase price
456,856

Less: AI Brazil Holdings' preferred share return
(2,470
)
Net proceeds to be allocated
454,386

NII's portion of purchase price (72.45%)
329,192

Less: Escrow related to convertible senior notes
(134,750
)
Less: Escrow related to sale
(30,000
)
Add: Accrued tax contingencies adjustment
1,881

Increase in consolidated cash and cash equivalents
$
166,323

    
This adjustment to cash and cash equivalents also reflects a portion of current director and officer insurance that will be refunded in connection with the closing of the transaction.

(b)
Reflects a portion of current director and officer insurance that will be refunded in connection with the closing of the transaction.

(c)
Reflects the elimination of Nextel Brazil's assets and liabilities previously classified as held for sale.

(d)
Includes a $134.8 million deposit placed into escrow in accordance with NII's indenture agreement governing our 4.25% convertible senior notes due 2023 and a $30.0 million deposit placed into escrow to secure specified indemnity obligations in connection with the sale of Nextel Brazil.

(e)
Includes $14.7 million related to the agreed upon settlement amount that resolves a dispute regarding the investment of funds in Nextel Holdings with AI Brazil. Also includes other liabilities triggered by the sale of Nextel Brazil, primarily certain success fees and severance costs.

(f)
Represents the reclassification of long-term debt to current portion of long-term debt, as well as the write-up of debt to its face value due to the acceleration of original issue discount amortization that is triggered by the convertible senior notes becoming immediately puttable upon closing of the sale.

(g)
Represents the reclassification of long-term debt to current portion of long-term debt.

(h)
Represents the effect on additional paid-in capital of the acceleration of certain stock-based compensation.




(i)
Reflects the impacts on accumulated deficit of the completion of the sale of Nextel Brazil, including an estimated $520.0 million gain.

(j)
Reflects the reclassification of accumulated other comprehensive loss, primarily related to Nextel Brazil's cumulative foreign currency translation losses.

(k)
Reflects the elimination of revenue and interest income historically reported by Nextel Brazil. For the indicated line items, all activity historically reported as part of Nextel Brazil's business has been eliminated.

(l)
Reflects the elimination of expenses as a result of the sale of Nextel Brazil. For the indicated line items, all activity historically reported as part of Nextel Brazil's business has been eliminated.

(m)
Reflects the elimination of interest expense as a result of the sale of Nextel Brazil.

(n)
Reflects the elimination of Nextel Brazil's income tax benefit.

(o)
Recalculated as the pro forma adjustment to net loss from continuing operations divided by the weighted average number of basic and diluted shares outstanding for the respective period.






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