DIRECTV 2009 Annual Report Download - page 108

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
jointly and severally, by substantially all of DIRECTV U.S.’ current and certain of its future domestic
subsidiaries on a senior unsecured basis. Pursuant to a registration rights agreement with the initial
purchasers of the senior notes, DIRECTV U.S. has filed a registration statement, whereby all holders
of the original notes can elect to exchange their existing notes for registered notes with identical terms,
except that the registered notes will be registered under the Securities Act of 1933, as amended and
will not bear the legends restricting their transfer. We expect to complete the registration and exchange
of these senior notes within the first half of 2010.
On September 22, 2009, DIRECTV U.S. purchased, pursuant to a tender offer, $583 million of its
then outstanding $910 million 8.375% senior notes at a price of 103.125% plus accrued and unpaid
interest, for a total of $603 million. On September 23, 2009, DIRECTV U.S. exercised its right to
redeem the remaining $327 million of the 8.375% senior notes at a price of 102.792% plus accrued and
unpaid interest. On October 23, 2009, DIRECTV U.S. redeemed the remaining $327 million of its
8.375% senior notes at a price of 102.792% plus accrued and unpaid interest for a total of
$339 million.
The redemption of our 8.375% senior notes resulted in a 2009 pre-tax charge of $34 million,
$21 million after tax, of which $27 million resulted from the premium paid for redemption of our
8.375% senior notes and $7 million resulted from the write-off of deferred debt issuance and other
transaction costs. The charge was recorded in ‘‘Other, net’’ in our Consolidated Statements of
Operations.
2008 Financing Transactions
In May 2008, DIRECTV U.S. completed financing transactions that included the issuance of
senior notes and an amendment to its existing senior secured credit facility as discussed below. We
incurred $19 million of debt issuance costs in connection with these transactions.
DIRECTV U.S. issued $1,500 million in senior notes due in 2016 in a private placement
transaction. The eight-year notes bear interest at 7.625%. Principal on the senior notes is payable upon
maturity, while interest is payable semi-annually commencing November 15, 2008. The senior notes
have been fully and unconditionally guaranteed, jointly and severally, by substantially all of DIRECTV
U.S.’ current and certain of its future domestic subsidiaries on a senior unsecured basis. On
November 11, 2008, we completed an exchange offer in which holders of substantially all of the
outstanding principal amount of the senior notes exchanged the original senior notes for registered
notes with identical terms, except that the registered notes are registered under the Securities Act of
1933, as amended, and do not bear the legends restricting their transfer.
DIRECTV U.S. also amended its senior secured credit facility to include a new $1,000 million
Term Loan C, which was issued at a 1% discount, resulting in $990 million of proceeds. Initially,
borrowings under Term Loan C bear interest at 5.25%, however the rate is variable based on changes
in the London InterBank Offered Rate, or LIBOR. The interest rate may be increased or decreased
under certain conditions. The Term Loan C has a final maturity of April 13, 2013, and we began
making quarterly principal payments totaling 1% annually on September 30, 2008. The senior secured
credit facility is secured by substantially all of DIRECTV U.S.’ assets and the assets of its current and
certain of its future domestic subsidiaries and is fully and unconditionally guaranteed, jointly and
severally, by substantially all of DIRECTV U.S.’ current and certain of its future domestic subsidiaries.
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