Disney gets new $6 billion 364-day facility, amends five-year loans

By Sarah Lizee

Olympia, Wash., Dec. 26 – Walt Disney Co. entered into a new $6 billion 364-day credit agreement to replace its existing $6 billion 364-day credit agreement scheduled to expire on March 8, 2019 and amended its $4 billion five-year credit agreement and $2.25 billion five-year credit agreement, according to an 8-K filing with the Securities and Exchange Commission.

The company said the amendments were made in anticipation of its planned acquisition of Twenty-First Century Fox, Inc. Walt Disney is merging into a wholly owned subsidiary of TWDC Holdco 613 Corp., which is a wholly owned subsidiary of the Disney, and Twenty-First Century Fox will merge into a separate wholly owned subsidiary of new Disney.

The five-year credit agreements support the company’s commercial paper borrowings and are available for other general corporate purposes.

The new 364-day credit agreement will expire on March 6, 2020. The company has the option to extend the maturity date of all or a portion of advances outstanding at the time of maturity for one year.

The 364-day credit agreement includes a guarantee by new Disney of the company’s payment obligations effective upon the consummation of the acquisition.

In addition, the terms are substantially similar to the provisions of the former facility, modified to reflect the guarantee from new Disney and its status as the parent of the company and Twenty-First Century Fox following the acquisition.

The amendment to the five-year credit agreements modify the agreements to include a guarantee from new Disney and amend some provisions, including representations, warranties, covenants and events of default to reflect the guarantee and new Disney’s parent status.

The $4 billion five-year credit agreement will expire on March 9, 2023. The $2.25 billion five-year credit agreement will expire on March 11, 2021.

Interest under the 364-day facility and $4 billion five-year facility is equal to Libor plus a margin equal to the credit default swap spread applicable to the company’s long-term senior debt, subject to a minimum margin that ranges from 15 basis points to 50 bps and a maximum margin that ranges from 75 bps to 150 bps. The floor and the cap depend on the company’s debt rating.

Interest under the $2.25 billion five-year facility is based on the same terms, with the minimum margin ranging from 20 bps to 50 bps and a maximum margin ranging from 87.5 bps to 150 bps.

The new facility and the amended facilities, as with the former facilities, contain only one financial covenant, relating to interest coverage, and specifically excludes some entities, including Hong Kong Disneyland and Shanghai Disney Resort, from any representations, covenants or events of default.

Citigroup Global Markets Inc., JPMorgan Chase Bank, NA, BNP Paribas Securities Corp. and Deutsche Bank Securities Inc. are joint lead arrangers and joint bookrunners for the 364-day facility, with Citibank, NA and JPMorgan as co-administrative agents.

BNP and Deutsche are co-syndication agents. Credit Suisse AG, Cayman Islands Branch, Goldman Sachs Bank USA, HSBC Bank USA, NA, Mizuho Bank, Ltd. Morgan Stanley MUFG Loan Partners, LLC, Royal Bank of Canada, Societe Generale, Sumitomo Mitsui Banking Corp., SunTrust Bank, TD Securities (USA) LLC and U.S. Bank, NA are co-documentation agents.

Agricultural Bank of China Ltd., New York Branch, Banco Santander, SA, New York Branch, Bank of China, Los Angeles Branch, Industrial and Commercial Bank of China Ltd., New York Branch, ING Bank NV, Dublin Branch and Standard Chartered Bank are managing agents.

The entertainment and media company is based in Burbank, Calif.

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