8-KMaterial AgreementsFinancial EventsExhibits & Filings

NETFLIX INC 8-K Report, Material Agreement (May 3, 2017)

Filed May 3, 2017For Securities:NFLX

Summary

Netflix, Inc. (NFLX) filed a Form 8-K on May 3, 2017, to report the entry into a material definitive agreement. Specifically, on May 2, 2017, the company entered into an indenture with Wells Fargo Bank National Association, as trustee, to issue €1.3 billion in principal amount of 3.625% Senior Notes due 2027. This issuance represents a significant debt financing event for Netflix, providing capital likely for ongoing content production and expansion efforts. These notes mature on May 15, 2027, and carry a semi-annual interest payment. The indenture includes provisions for early redemption at a premium and a mandatory repurchase at 101% of principal in the event of a change of control. It also imposes covenants restricting the company's ability to create liens, incur certain indebtedness, and engage in significant asset dispositions or mergers, which are common for senior notes and aim to protect bondholders. A registration rights agreement was also executed, obligating Netflix to file a registration statement for exchange notes if the original notes are not freely transferable within 380 days.

Key Highlights

  • 1Netflix issued €1.3 billion in 3.625% Senior Notes due May 15, 2027.
  • 2The issuance was conducted through an indenture with Wells Fargo Bank National Association as trustee.
  • 3Interest on the notes is payable semi-annually at a rate of 3.625% per annum.
  • 4The company has the option to redeem the notes prior to maturity at a 'make-whole' premium.
  • 5A change of control event triggers an obligation for Netflix to repurchase the notes at 101% of the principal amount.
  • 6The indenture contains covenants restricting Netflix's ability to incur certain debt, create liens, and undergo significant corporate changes (mergers, asset sales).
  • 7A registration rights agreement was entered into, requiring Netflix to facilitate the exchange of these notes for freely tradable registered notes if necessary.

Frequently Asked Questions

This 8-K filing is to report that Netflix, Inc. has entered into a material definitive agreement, specifically an indenture for the issuance of new senior notes.

Netflix issued €1.3 billion principal amount of 3.625% Senior Notes due May 15, 2027. Interest is paid semi-annually at 3.625% per year. The notes can be redeemed by Netflix at a premium and must be repurchased at 101% of face value in case of a change of control.

The indenture includes covenants that restrict Netflix and its domestic subsidiaries from creating certain liens, entering into sale and lease-back transactions, incurring or guaranteeing certain indebtedness, and from consolidating, merging, or selling substantially all of its assets, subject to certain exceptions and limitations.

The Registration Rights Agreement ensures that the holders of these newly issued notes can eventually hold notes that are freely transferable under SEC rules. If the original notes are not freely transferable within 380 days, Netflix is obligated to use commercially reasonable efforts to register an exchange offer for 'Exchange Notes' with identical terms but without transfer restrictions.