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 Notes
In June 2022, QVC completed its purchase of $536听million of the outstanding 4.375% Senior Secured Notes due 2023 (the "2023 Notes") pursuant to a cash tender offer to purchase any and all of its outstanding 2023 Notes (the 鈥淭ender Offer鈥). As a result of the Tender Offer, the Company recorded a loss on extinguishment of debt in the condensed consolidated statements of operations of $6听million for the three and six months ended June 30, 2022. As of June 30, 2022, the remaining outstanding 4.375% Senior Secured Notes due 2023 are classified within current portion of debt as they mature in less than one year.
QVC Senior Secured Credit Facility
On October 27, 2021, QVC amended and restated its latest credit agreement (as amended and restated, the 鈥淔ifth Amended and Restated Credit Agreement鈥) and refinanced QVC鈥檚 existing bank credit facility by entering into a fifth amended and restated agreement with QVC, Zulily, Cornerstone, and QVC Global Corporate Holdings, LLC (鈥淨VC Global鈥), each a direct or indirect wholly owned subsidiary of jvid视频, as borrowers (QVC, Zulily, Cornerstone and QVC Global, collectively, the 鈥淏orrowers鈥), JPMorgan Chase Bank, N.A., as administrative agent, and the other parties named therein.
The Fifth Amended and Restated Credit Agreement is a multi-currency facility providing for a $3.25听billion revolving credit facility (the 鈥淣ew Credit Facility鈥), with a $450听million sub-limit for letters of credit and an alternative currency revolving sub-limit equal to听50% of the revolving commitments thereunder. 听 The New Credit Facility may be borrowed by any Borrower, with each Borrower jointly and severally liable for the outstanding borrowings. Borrowings under the Fifth Amended and Restated Credit Agreement bear interest at either the alternate base rate (such rate, the 鈥淎BR Rate鈥) or a LIBOR-based rate (or the applicable non-U.S. Dollar equivalent rate) (such rate, the 鈥淭erm Benchmark/RFR Rate鈥) at the applicable Borrower鈥檚 election in each case plus a margin. Borrowings that are ABR Rate loans will bear interest at a per annum rate equal to the base rate plus a margin that varies between听0.25% and听0.625% depending on the Borrowers鈥 combined ratio of consolidated total debt to consolidated EBITDA (the 鈥渃onsolidated leverage ratio鈥). Borrowings that are Term Benchmark/RFR Rate loans will bear interest at a per annum rate equal to the applicable rate plus a margin that varies between听1.25% and听1.625% depending on the Borrowers鈥 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, Cornerstone, QVC Global or any other borrower under the New Credit Facility (other than QVC) is removed, at the election of QVC, as a borrower thereunder, all of its loans must be repaid and its letters of credit are terminated or cash collateralized. Any amounts prepaid on the New Credit Facility may be reborrowed.
The loans under the New Credit Facility are scheduled to mature on October 27, 2026. Payment of the loans may be accelerated following certain customary events of default.
The payment and performance of the Borrowers鈥 obligations under the Fifth Amended and Restated Credit Agreement are guaranteed by each of QVC鈥檚, QVC Global鈥檚, Zulily鈥檚 and Cornerstone鈥檚 Material Domestic Subsidiaries (as defined in the Fifth Amended and Restated Credit Agreement), if any, and certain other subsidiaries of any Borrower that such Borrower has chosen to provide guarantees. Further, the borrowings under the Fifth 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. The borrowings under the Fifth Amended and Restated Credit Agreement are also secured by a pledge of all of Zulily鈥檚 and Cornerstone鈥檚 equity interests.
The Fifth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on the Borrowers 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 the Borrowers鈥 consolidated leverage ratio.
Borrowings under the Fifth Amended and Restated Credit Agreement may be used to repay outstanding indebtedness, pay certain fees and expenses, finance working capital needs and general purposes of the Borrowers and their respective subsidiaries and make certain restricted payments and loans to the Borrowers鈥 respective parents and affiliates.
Availability under the Fifth Amended and Restated Credit Agreement at June听30, 2022 was $2,314 million. 听The interest rate on the Fifth Amended and Restated Credit Agreement was听3.0% at June听30, 2022.
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 June听30, 2022 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
Debt Covenants jvid视频 and its subsidiaries are in compliance with all debt covenants at June听30, 2022. 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 June听30, 2022 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 June听30, 2022. |
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