Summary
This 8-K filing by Warner Bros. Discovery, Inc. (WBD), then operating as Discovery Communications, Inc., details significant amendments to its credit agreements and the establishment of a new term loan facility, primarily to facilitate the previously announced acquisition of Scripps Networks Interactive, Inc. The amendments to the existing credit agreement include permitting the Scripps Acquisition, allowing for related indebtedness, and making Scripps Networks Interactive, Inc. a guarantor post-acquisition. Key financial terms were adjusted, such as an increase in aggregate revolving commitments to $2.5 billion and an extension of the maturity date to August 11, 2022. The financial covenants were also modified to accommodate the acquisition, with a reset consolidated leverage ratio and provisions for future step-downs. Additionally, a new $2.0 billion Term Loan Facility was established with Goldman Sachs Bank USA to fund a portion of the cash consideration for the Scripps Acquisition and related expenses.
Key Highlights
- 1Amendment to Credit Agreement: Discovery Communications, LLC (DCL) entered into Amendment No. 1 to its Amended and Restated Credit Agreement, dated February 4, 2016.
- 2Scripps Acquisition Permitted: The amendments expressly permit the announced acquisition of Scripps Networks Interactive, Inc., the incurrence of related debt, and the assumption of certain indebtedness.
- 3Increased Revolving Commitments: Aggregate revolving commitments under the credit agreement were increased from $2.0 billion to $2.5 billion.
- 4Extended Maturity Date: The maturity date of the credit agreement was extended from February 4, 2021, to August 11, 2022.
- 5Modified Financial Covenants: Financial covenants were adjusted, including resetting the consolidated leverage ratio to 5.50 to 1.00 with planned step-downs.
- 6New Term Loan Facility: A new Term Loan Credit Agreement was entered into, providing for a $2.0 billion facility ($1.0 billion in a 3-year tranche and $1.0 billion in a 5-year tranche).
- 7Purpose of Term Loan: Proceeds from the Term Loan Facility are intended to finance a portion of the cash consideration for the Scripps Acquisition and related fees and expenses.