Long-Term Debt Maturities

NOTE 11. BORROWINGS

 

 

Bank loans

In January 2013, Sky Deutschland, a majority owned subsidiary of the Company, entered into a credit agreement, with major financial institutions, that 21st Century Fox America, Inc. (formerly known as News America Incorporated) (“21CFA”), a wholly-owned subsidiary, and the Company have both guaranteed. The credit agreement provides a €300 million unsecured credit facility with a sub-limit of €75 million revolving credit facility available for cash drawdowns or the issuance of letters of credit and a maturity date of February 2018. Sky Deutschland may request that the maturity date be extended for one year. The material terms of the agreement include limitations on liens and indebtedness. Fees under the credit agreement are based on the Company’s long-term senior unsecured non-credit enhanced debt ratings. Given the current debt ratings of the Company, Sky Deutschland pays a facility fee of 0.125% and interest of Eurocurrency Rate plus 1.125%. As of June 30, 2014, €225 million ($308 million) was outstanding under this credit agreement and €73 million was available for either additional financing or letters of credit. The proceeds were used to repay existing Sky Deutschland debt. In fiscal 2014, Sky Deutschland amended its credit agreement to increase the size of its revolving credit facility by €78.5 million. Sky Deutschland intends to draw and utilize funds from the enhancement for the development of production capabilities. If Sky Deutschland does not draw and utilize the funds by September 30, 2014, this amendment to the credit agreement will be rescinded. The amendment did not materially change the terms of the original credit facility entered into in January 2013.

In connection with the acquisition of the majority interest in the YES Network in February 2014, the Company consolidated $1.1 billion, the aggregate outstanding under a term loan facility and a secured revolving credit facility, collectively (the “YES Credit Agreement”), with a sub-limit available for the issuance of letters of credit. The material terms of the YES Credit Agreement include various financial and restrictive covenants. The YES Credit Agreement is collateralized by a substantial portion of the real and personal property assets of the YES Network. At the election of the YES Network, the YES Credit Agreement bears interest at (i) one, two, three or six month LIBOR plus the applicable LIBOR margin, or (ii) the Base Rate plus a Base Rate margin; margins reset quarterly based on the specified leverage ratio of YES Network. The YES Network pays a facility fee of 0.50%. Principal payments with respect to the term loan are required quarterly. Additionally, an annual excess cash flow payment is required as mandatory prepayment of future amortization obligations, subject to certain leverage ratio conditions. The YES Credit Agreement also provides for the establishment of additional credit facilities provided certain terms and provisions are met. As of June 30, 2014, the outstanding balance on the term loan and secured revolving credit facility was $1.07 billion and $60 million, respectively. The total amount available under the secured revolving credit facility is $305 million.

Public debt - Predecessor indentures

These notes are issued under previous indentures, as supplemented, by and among 21CFA, the Company as Parent Guarantor and the trustees. These notes are direct unsecured obligations of 21CFA and rank pari passu with all other unsecured indebtedness of 21CFA. Redemption may occur, at the option of the holders, at 101% of the principal plus an accrued interest amount in certain circumstances where a change of control is deemed to have occurred. These notes are subject to certain covenants, which, among other things, restrict secured indebtedness to 10% of tangible assets and in certain circumstances limit new senior indebtedness.

Included in the predecessor indentures as of June 30, 2013 was A$150 million ($137 million) of 8.625% Senior Notes which were retired in February 2014. The Company will not issue any new debt under the predecessor indentures.

Public debt - Senior notes issued under August 2009 indenture

These notes are issued under the Amended and Restated Indenture dated as of August 25, 2009, as supplemented, by and among 21CFA, the Company, as Parent Guarantor, and The Bank of New York Mellon, as Trustee (the “2009 Indenture”). These notes are direct unsecured obligations of 21CFA and rank pari passu with all other unsecured indebtedness of 21CFA. Redemption may occur, at the option of the holders, at 101% of the principal plus an accrued interest amount in certain circumstances where a change of control is deemed to have occurred. These notes are subject to certain covenants, which, among other things, limit the Company’s ability and the ability of the Company’s subsidiaries, to create liens and engage in a merger, sale or consolidation transaction. The 2009 Indenture does not contain any financial maintenance covenants.

Under the August 2009 indenture, the Company recently had the following issuances:

In September 2013, 21CFA issued $300 million of 4.00% Senior Notes due 2023 and $700 million of 5.40% Senior Notes due 2043. The net proceeds of $987 million were used for general corporate purposes.

In September 2012, 21CFA issued $1.0 billion of 3.00% Senior Notes due 2022. The net proceeds of $987 million were used for general corporate purposes.

Other borrowings

Other borrowings include the Senior Subordinated Notes, consolidated in connection with the acquisition of the majority interest of the YES Network, issued in June 2008 with a principal amount of $525 million pursuant to an indenture agreement and note purchase agreement. These notes are direct unsecured obligations of the YES Network and rank pari passu with all other unsecured indebtedness of the YES Network. Redemption may occur after a specified date, in whole or in part, at the option of the Company, at the principal plus any redemption fees, otherwise the principal amount is due at maturity. These agreements contain various customary affirmative and negative covenants. On acquisition of the majority interest in the YES Network, the Company recorded a preliminary fair value adjustment to increase the carrying value of the Senior Subordinated Notes to the acquisition date fair value of approximately $605 million yielding an effective interest rate of 5.75%. The adjustment is being amortized as a reduction of interest expense over the remaining term of the obligation.

Current borrowings

Included in Borrowings within current liabilities as of June 30, 2014, was 5.30% Senior Notes of $750 million and principal payments on the YES Network term loan of $49 million that is due in the next 12 months.

Original Currencies of Borrowings

Borrowings are payable in the following currencies:

 

^(a)Sky Deutschland credit agreement.

Revolving Credit Agreement

In May 2012, 21CFA entered into a credit agreement (the “Credit Agreement”), among 21CFA as Borrower, the Company as Parent Guarantor, the lenders named therein, the initial issuing banks named therein, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”) and Citibank, N.A. as Co-Administrative Agents, JPMorgan Chase as Designated Agent and Bank of America, N.A. as Syndication Agent. The Credit Agreement provides a $2 billion unsecured revolving credit facility with a sub-limit of $400 million (or its equivalent in Euros) available for the issuance of letters of credit and a maturity date of May 2017. Under the Credit Agreement, the Company may request an increase in the amount of the credit facility up to a maximum amount of $2.5 billion and the Company may request that the maturity date be extended for up to two additional one-year periods. Borrowings are issuable in U.S. Dollars only, while letters of credit are issuable in U.S. Dollars or Euros. The material terms of the agreement include the requirement that the Company maintain specific leverage ratios and limitations on secured indebtedness. Fees under the Credit Agreement will be based on the Company’s long-term senior unsecured non-credit enhanced debt ratings. Given the current debt ratings, 21CFA pays a facility fee of 0.125% and an initial drawn cost of LIBOR plus 1.125%.