8-KMaterial AgreementsFinancial EventsExhibits & Filings

AT&T INC. 8-K Report, Material Agreement (Nov 15, 2016)

Filed November 15, 2016For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. (T) filed an 8-K on November 15, 2016, to report the entry into a significant $10 billion Term Loan Credit Agreement. This new loan effectively replaces and reduces the "Tranche 2 Commitments" of a previously established $40 billion "Bridge Loan" to zero, while $30 billion in "Tranche 1 Commitments" under the Bridge Loan remain active. The primary purpose of the new Term Loan is to finance a portion of the cash consideration for AT&T's proposed acquisition of Time Warner Inc., along with refinancing Time Warner's debt and associated fees. The loan is structured into two $5 billion tranches (Tranche A and Tranche B) with varying repayment timelines and interest rate structures based on the company's unsecured long-term debt ratings. The agreement includes standard covenants such as limitations on liens and a net debt-to-EBITDA ratio, which AT&T must maintain. The loan's availability is contingent on the successful closing of the Time Warner merger, the absence of material adverse effects on Time Warner, and the delivery of necessary financial information.

Key Highlights

  • 1AT&T entered into a $10 billion Term Loan Credit Agreement on November 15, 2016.
  • 2This new Term Loan is intended to finance part of the cash consideration for the acquisition of Time Warner Inc.
  • 3The $10 billion "Tranche 2 Commitments" under a prior $40 billion Bridge Loan were reduced to zero, with $30 billion in "Tranche 1 Commitments" remaining.
  • 4The Term Loan is comprised of two $5 billion tranches: Tranche A and Tranche B, with different repayment schedules.
  • 5Interest rates are variable and depend on AT&T's unsecured long-term debt ratings from S&P, Moody's, and Fitch.
  • 6Key covenants include limitations on liens and a net debt-to-EBITDA ratio not to exceed 3.5 to 1.
  • 7Borrowing under the Term Loan is conditioned on the consummation of the Time Warner merger and the absence of a material adverse effect on Time Warner.

Frequently Asked Questions

The primary purpose of this $10 billion Term Loan is to finance a portion of the cash consideration required for AT&T's proposed acquisition of Time Warner Inc., as well as to refinance debt of Time Warner and cover associated fees and expenses.

The entry into this new $10 billion Term Loan results in the reduction of the "Tranche 2 Commitments" under AT&T's existing $40 billion Bridge Loan to zero. The "Tranche 1 Commitments" of $30 billion under the Bridge Loan remain in effect.

AT&T must maintain a net debt-to-EBITDA ratio of not more than 3.5 to 1, starting from the first full fiscal quarter after the closing date. The loan also includes limitations on liens and other customary covenants.

Advances under Tranche A are to be repaid no later than two years and six months after the date they are made. Advances under Tranche B will begin amortization two years and nine months after they are made, with the full principal due four years and six months after the borrowing date.