Summary
This 8-K filing by Discovery Communications, Inc. (WBD), dated May 14, 2009, details significant amendments to its debt facilities. Specifically, it outlines an amendment to the existing Term Loan B agreement and the establishment of a new Term Loan C. The key impact for investors is the addition of $500 million in new debt under Term Loan C, maturing in May 2014. This new facility is secured by the same assets as the existing Term Loan B and carries an interest rate of LIBOR plus 3.25% with a LIBOR floor of 2.00%. The proceeds from Term Loan C were used to repay existing indebtedness, indicating a refinancing or restructuring of debt. The amendment to Term Loan B also removes a requirement for lenders to commit to additional facilities, potentially offering Discovery more flexibility in future financing. The filing also provides details on the covenants and events of default associated with the new Term Loan C, which are largely identical to those in Term Loan B. These include restrictions on dividends, investments, additional indebtedness, asset sales, and capital expenditures, as well as a total leverage ratio financial maintenance covenant. For investors, these terms signal the company's commitment to managing its leverage and maintaining a certain financial profile, while also highlighting the operational and financial constraints associated with this new debt.
Key Highlights
- 1Discovery Communications, Inc. (WBD) entered into Amendment No. 1 to its Term Loan B agreement and established a new Term Loan C facility.
- 2A new Term Loan C of $500 million was incurred by Discovery Communications Holding, LLC (DCH), maturing on May 14, 2014.
- 3Term Loan C bears an initial interest rate of LIBOR plus 3.25%, with a 2.00% LIBOR floor.
- 4The new $500 million Term Loan C facility is secured by the same assets as the existing Term Loan B.
- 5Proceeds from Term Loan C were used to repay outstanding indebtedness under a prior Discovery credit agreement.
- 6The amendment to Term Loan B eliminates the obligation for DCH to provide existing lenders with ten business days to commit to any additional term facilities.
- 7Term Loan C includes customary covenants and events of default, mirroring those in Term Loan B, such as restrictions on dividends, investments, and leverage.