8-KMaterial AgreementsFinancial EventsExhibits & Filings

Fox Corp 8-K Report, Material Agreement (Jun 15, 2023)

Filed June 15, 2023For Securities:FOXAFOX

Summary

Fox Corporation (FOXA) has entered into a new $1.0 billion, five-year unsecured revolving credit facility, which can be increased to $1.75 billion. This new agreement replaces their existing credit facility, which was set to expire in March 2024. The primary drivers for this refinancing are the transition away from LIBOR and the upcoming termination of the prior agreement. The new facility offers flexibility with options for Base Rate or Adjusted Term SOFR based borrowings, and includes customary covenants, such as maintaining an operating income leverage ratio of 4.5 to 1.0. This action demonstrates proactive financial management by Fox Corp. The company has not yet drawn any funds from the new facility, indicating a strong liquidity position. The new credit agreement is a positive signal for investors, showcasing the company's ability to secure favorable financing terms and its commitment to maintaining robust financial flexibility as it navigates market changes like the shift from LIBOR.

Key Highlights

  • 1Fox Corp entered into a new $1.0 billion unsecured revolving credit facility, replacing its expiring agreement.
  • 2The facility has a maturity date of June 14, 2028, with options for extension.
  • 3The credit line can be increased up to $1.75 billion at the company's request.
  • 4The new agreement is a proactive move to transition away from LIBOR and accommodate the termination of the previous credit facility.
  • 5Borrowings can be structured under a Base Rate or Adjusted Term SOFR option.
  • 6Key financial covenants, including an operating income leverage ratio of 4.5x, are maintained.
  • 7Fox Corp has not yet borrowed any funds under the new or previous credit facilities, suggesting ample liquidity.

Frequently Asked Questions

Fox Corp entered into a new $1.0 billion revolving credit facility primarily to replace its existing agreement, which is scheduled to terminate in March 2024. This also allows the company to transition away from the London Interbank Offered Rate (LIBOR) to newer benchmark rates like SOFR.

The new unsecured revolving credit facility is for $1.0 billion, with an option for Fox Corp to increase it to $1.75 billion. The facility has a five-year term, maturing on June 14, 2028, and can potentially be extended for two additional one-year periods.

The new agreement demonstrates Fox Corp's ability to secure financing on favorable terms and proactively manage its debt structure. The lack of current borrowings suggests strong liquidity and financial flexibility, which are positive indicators for investors.

Borrowings under the new facility can be at the Company's option, either at the Base Rate (tied to prime rate, federal funds rate, or Adjusted Term SOFR) or at the Adjusted Term SOFR rate. Both options include applicable margins based on the Company's debt ratings.