Summary
Fox Corporation (FOXA) filed an 8-K on March 15, 2019, to report the entry into two significant credit agreements. The first is a $1.0 billion, five-year unsecured revolving credit facility, which can be increased up to $1.5 billion. This facility is intended for general corporate purposes and offers flexibility in borrowing at either a Base Rate or Eurodollar Rate, with terms influenced by the company's debt ratings. The second agreement is a 364-day Bridge Term Loan facility totaling $1.7 billion. This facility is specifically designed to fund a portion of an $8.5 billion cash dividend expected to be paid to Twenty-First Century Fox, Inc. (21CF) in connection with the company's separation from 21CF and the consummation of the Disney acquisition. It can also be used for related transaction fees and expenses, and up to $500 million for general corporate purposes. Both agreements include customary covenants and financial maintenance requirements, such as an operating income leverage ratio.
Key Highlights
- 1Fox Corp entered into a $1.0 billion unsecured revolving credit facility maturing in March 2024, with an option to increase the facility to $1.5 billion.
- 2The revolving credit facility is available for general corporate purposes.
- 3A separate 364-day Bridge Term Loan Agreement was established for up to $1.7 billion.
- 4The Bridge Term Loan is primarily intended to fund a portion of an $8.5 billion dividend related to the separation from 21CF and the Disney acquisition.
- 5Borrowing rates for both facilities are based on either a Base Rate or a Eurodollar Rate, influenced by the company's debt ratings.
- 6Both credit agreements include customary affirmative and negative covenants, including limitations on affiliate transactions, liens, and fundamental changes.
- 7A key financial covenant across both agreements is the requirement to maintain an operating income leverage ratio of 4.5 to 1.0, with provisions for temporary increases related to acquisitions.