Item 1.01 Entry into a Material Definitive Agreement.
On
The Credit Agreement provides for a senior revolving credit facility with
initial commitments of
The obligations of the Borrowers under the Credit Agreement are unsecured and
are guaranteed by Discovery and Scripps. Following the closing of the proposed
combination transactions, the obligations of the Borrowers will also be
guaranteed by the holding company of the WarnerMedia business. Proceeds from the
Credit Agreement may be used to repay all obligations under the existing
Loans under the Credit Agreement will bear interest based on a floating rate (which may be LIBOR, the Base Rate, EURIBOR, TIBOR or SONIA based on the applicable currency of borrowing) plus a margin. The margin for dollar-based LIBOR loans will range from 77.5 basis points to 135.0 basis points based on Discovery's debt ratings from time to time. In addition, DCL has agreed to pay to the Lenders a facility fee, quarterly in arrears, on the aggregate commitments that ranges from 10.0 basis points to 27.5 basis points based on Discovery's debt ratings from time to time.
The senior credit facility will be available on a revolving basis until
The Credit Agreement contains customary representations and warranties as well as affirmative and negative covenants. Negative covenants include, among others, with respect to DCL, Scripps and their subsidiaries, and following the closing of the proposed combination transactions, the holding company of the WarnerMedia business and its subsidiaries, limitations on liens, investments, indebtedness, dispositions, transactions with affiliates, dividends and restricted payments and certain burdensome agreements. Such entities as well as Discovery are also subject to a limitation on mergers and disposition of all or substantially all of their respective assets. The Credit Agreement contains customary events of default, including, among others, the occurrence of a Change in Control (as defined in the Credit Agreement).
The Credit Agreement also requires DCL to maintain a consolidated interest coverage ratio (as defined in the Credit Agreement) of no less than 3:00 to 1:00 and a consolidated leverage ratio (as defined in the Credit Agreement) of no more than (i) from and after the last day of the first full fiscal quarter following the Effective Date (as defined in the Credit Agreement) to the Measurement Period (as defined in the Credit Agreement) ending on the last day of the first full fiscal quarter following the Closing Date (as defined in the Credit Agreement), 4.50 to 1:00, (ii) from and after the Measurement Period ending on the last day of the first full fiscal quarter following the Closing Date to the Measurement Period ending on the last day of the first full fiscal quarter after the first anniversary of the Closing Date, no more than 5.75:1.00, (iii) from and after the Measurement Period ending on the last day of the full fiscal quarter after the first anniversary of the Closing Date to the Measurement Period ending on the last day of the first full quarter after the second anniversary of the Closing Date, 5.00:1.00, and (iv) thereafter, 4.50:1.00.
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In calculating consolidated EBITDA for purposes of calculating the financial
covenants, certain additional items that would not have been permitted addbacks
under the existing
The foregoing description of the Credit Agreement does not purport to be a complete statement of the parties' rights under such agreement and is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed as Exhibit 4.1 hereto.
Item 1.02 Termination of a Material Definitive Agreement.
On
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit Number Description 4.1 Credit Agreement, dated as ofJune 9, 2021 , amongDiscovery Communications, LLC ("DCL"), certain wholly-owned subsidiaries of DCL,Discovery, Inc. , as Facility Guarantor,Scripps Networks Interactive, Inc. , as subsidiary guarantor, the lenders from time to time party thereto andBank of America, N.A ., as administrative agent, swing line lender and L/C issuer. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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