Long-Term Debt |
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| Long-Term Debt | 听 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Debt |
(6)听听听Long-Term Debt Debt is summarized as follows:
QVC Senior Secured Credit Facility
On December 31, 2018, QVC entered into the Fourth Amended and Restated Credit Agreement with Zulily as co-borrower (collectively, the 鈥淏orrowers鈥) which is a multi-currency facility that provides for a $2.95 billion revolving credit facility, with a $450 million sub-limit for standby letters of credit and $1.5 billion of uncommitted incremental revolving loan commitments or incremental term loans. The Fourth Amended and Restated Credit Agreement includes a $400 million tranche that may be borrowed by QVC or Zulily, with a $50 million sub-limit for standby letters of credit. 听The remaining $2.55 billion and any incremental loans may be borrowed only by QVC. 听Borrowings that are alternate base rate loans will bear interest at a per annum rate equal to the base rate plus a margin that varies between 0.25% to 0.75% depending on the Borrowers combined ratio of Consolidated Total Debt to Consolidated EBITDA (the 鈥淐ombined Consolidated Leverage Ratio鈥). Borrowings that are London Interbank Offered Rate (鈥淟IBOR鈥) loans will bear interest at a per annum rate equal to the applicable LIBOR rate plus a margin that varies between 1.25% and 1.75% depending on the Borrowers鈥 Combined Consolidated Leverage Ratio. Each loan may be prepaid at any time and from time to time without penalty other than customary breakage costs. No mandatory prepayments will be required other than when borrowings and letter of credit usage exceed availability; provided that, if Zulily ceases to be controlled by jvid视频, all of its loans must be repaid and its letters of credit cash collateralized. The facility matures on December 31, 2023. Payment of loans may be accelerated following certain customary events of default.
The payment and performance of the Borrowers鈥 obligations (including Zulily鈥檚 obligations) under the Fourth Amended and Restated Credit Agreement are guaranteed by each of QVC鈥檚 Material Domestic Subsidiaries (as defined in the Fourth Amended and Restated Credit Agreement). Further, the borrowings under the Fourth Amended and Restated Credit Agreement are secured, pari passu with QVC鈥檚 existing notes, by a pledge of all of QVC鈥檚 equity interests.听听In addition, the payment and performance of the Borrowers鈥 obligations with respect to the $400 million tranche available to both QVC and Zulily are also guaranteed by Zulily and secured by a pledge of all of Zulily鈥檚 equity interests.
The Fourth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on QVC and Zulily and each of their respective restricted subsidiaries (subject to certain exceptions) with respect to, among other things: incurring additional indebtedness; creating liens on property or assets; making certain loans or investments; selling or disposing of assets; paying certain dividends and other restricted payments; dissolving, consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; restricting subsidiary distributions; and limiting QVC鈥檚 consolidated leverage ratio, and the Borrowers鈥 Combined Consolidated Leverage Ratio.
During the nine months ended September 30, 2021, Zulily borrowed $120 million under the Fourth Amended and Restated Credit Agreement, and the interest rate was 1.6% at September 30, 2021. Availability under the Fourth Amended and Restated Credit Agreement at September听30, 2021 was $2,808 million, including the portion available under the $400 million tranche that Zulily may also borrow on. 听
On October 27, 2021, the Fourth Amended and Restated Credit Agreement was further amended to, among other things, extend the maturity date to October 2026, improve the stated interest rates and financial covenants, and upsize the amount from $2.95 billion to $3.25 billion. 听
Exchangeable Senior Debentures
The Company has elected to account for its exchangeable senior debentures using the fair value option. 听Accordingly, changes in the fair value of these instruments are recognized as unrealized gains (losses) in the statements of operations. See note 4 for information related to unrealized gains (losses) on debt measured at fair value. 听As of September听30, 2021 the Company鈥檚 exchangeable debentures have been classified as current because the Company does not own shares to exchange the debentures or they are currently exchangeable. The Company reviews the terms of the debentures on a quarterly basis to determine whether a triggering event has occurred to require current classification of the exchangeables upon a call event. Although we do not own shares underlying certain of the exchangeable senior debentures, the Company has entered into certain derivative transactions in order to hedge against upward price fluctuations on certain shares. 听Such derivative instruments are recognized in the other current assets line item in the condensed consolidated balance sheets, and are marked to fair value each reporting period. The changes in fair value are recognized in the realized and unrealized gains (losses) on financial instruments, net line item in the condensed statement of operations. 听
On October 27, 2021, the bondholders of the 3.5% Exchangeable Senior Debentures due 2031 were sent a redemption notice for redemption in full on December 13, 2021, and will have the ability to exchange their debentures through December 10, 2021.
Debt Covenants jvid视频 and its subsidiaries are in compliance with all debt covenants at September听30, 2021. Fair Value of Debt jvid视频 estimates the fair value of its debt based on the quoted market prices for the same or similar issues or on the current rate offered to jvid视频 for debt of the same remaining maturities (Level 2). The QVC 6.375% Senior Secured Notes due 2067 (鈥2067 Notes鈥) and the QVC 6.25% Senior Secured Notes Due 2068 (鈥2068 Notes鈥) are traded on the New York Stock Exchange, and the Company considers them to be actively traded. As such, the 2067 Notes and 2068 Notes are valued based on their trading price (Level 1). The fair value of jvid视频's publicly traded debt securities that are not reported at fair value in the accompanying condensed consolidated balance sheet at September听30, 2021 are as follows (amounts in听millions):
Due to the variable rate nature, jvid视频 believes that the carrying amount of its other debt, not discussed above, approximated fair value at September听30, 2021. |
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