Deutsche Telekom Sweetens MetroPCS Bid

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Deutsche Telekom on Wednesday sweetened its terms for the proposed merger between T-Mobile USA and MetroPCS Communications by reducing the combined company's debt due to pressure from activists and proxy advisory firms.

Shares of MetroPCS rose 2 percent in late trade after Deutsche Telekom, the parent of T-Mobile USA, said it would reduce the debt burden for the combined company by $3.8 billion and lower the interest rate on the debt by 50 basis points.

Deutsche Telekom also expanded the lock-up period, during which it is prohibited from publicly selling shares in the company, by 12 months to 18 months after the deal close.

The new proposal will reduce intercompany debt to $11.2 billion from a proposed $15 billion for the new company.

The German operator did not change the equity structure of the new company, which will be 74 percent owned by Deutsche Telekom and 26 percent owned by MetroPCS shareholders.

The new terms will postpone a special meeting of MetroPCS shareholders that was scheduled for April 12, according to a Deutsche Telekom source with knowledge of the situation.

MetroPCS shares rose more than 2 percent to $11.84 in extended-hours trading after closing at $11.56, up 3.3 percent in the regular New York Stock Exchange session.