Sprint Nextel Obtains $2.8 Billion Credit Line Due in Five Years

Sprint Nextel Corp. (S), the third- largest U.S. mobile-phone service provider, replaced a $2.2 billion revolving line of credit that expires in October with a larger pact.

JPMorgan Chase & Co. and Citigroup Inc. arranged the new deal, which matures in February 2018 and expands its borrowing capacity by $600 million, the company said today in a regulatory filing. Proceeds will be used for general corporate purposes, Sprint Nextel said.

Under terms of the credit pact, the Overland Park, Kansas- based company’s debt to earnings must not exceed 6.25 times through June 30, 2014, stepping down gradually to 4 times for the fiscal quarter ended Dec. 31, 2016, and remaining at that level for its duration, according to the filing.

Verizon Wireless and AT&T Inc. (T) are the two largest U.S. mobile-phone service providers.

In a revolving line of credit, money may be borrowed again once it’s repaid; in a term loan it can’t.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net.

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net.