Fortunately for Virgin Mobile USA, it was able to tweak its capital structure and purchase Helio at the same time — largely by giving up equity to reduce debt. The numbers are head-spinning, but in the end the acquirer ended up with almost 20 percent less in senior secured debt and $90 million in additional revolving credit availability, before using some of the revolver to pay Helio's outstanding debt of $15 million. (SK Telecom and Virgin Group, an investor in Virgin Mobile USA, provided the company with a new $60 million line of credit.) While the price of the combined company's senior debt increased 100 basis points (to LIBOR plus 550), Virgin also gained the option to add $15 million of borrowing capacity, and the banks reduced its leverage-ratio covenant by 25 basis points.

Of course, Virgin Mobile USA had to make concessions — substantial ones, some would argue. SK Telecom and Virgin Group each got $50 million in equity in the combined company in the form of mandatory convertible preferred stock. That was on top of the $39 million in shares that Virgin Mobile exchanged for Helio. (SK Telecom now has two board seats.)

But Feehan says the economics of the deal are excellent. Helio's 170,000-strong customer base and infrastructure for offering postpaid wireless services are expected to produce an immediate cash-flow benefit — about $1.7 million per quarter, Feehan says, more than offsetting the $150,000 increase in revolver interest-rate charges.

"Before, we might have had to decide not to grow, which would have been bad," he says. "Now we are positioned to make the right decision as opportunities arise — we have the cash flow and the covenant headroom." — V.R.

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