DIRECTV 2011 Annual Report Download - page 73

DIRECTV
borrowings consist of notes payable issued by DIRECTV U.S. as more fully Revolving Credit Facility
described in Note 10 of the Notes to the Consolidated Financial Statements in In February 2011, DIRECTV U.S.’ $500 million, six-year senior secured
Item 8, Part II of this Annual Report, which we incorporate herein by reference. credit facility was terminated and replaced with a new five-year, $2.0 billion
Our senior notes payable mature as follows: $1,000 million in 2014, revolving credit facility. We pay a commitment fee of 0.30% per year for the
$1,200 million in 2015, $3,750 million in 2016 and $7,550 million thereafter. unused commitment under the revolving credit facility, and borrowings will bear
interest at an annual rate of (i) the London interbank offer rate (LIBOR) (or for
All of our senior notes were issued by DIRECTV Holdings LLC and Euro advances the EURIBOR rate) plus 1.50% or, at our option (ii) the higher of
DIRECTV Financing Co., Inc., or the Co-Issuers, and have been registered under the prime rate plus 0.50% or the Fed Funds Rate plus 1.00%. The commitment
the Securities Act of 1933, as amended. On November 14, 2011, we entered into a fee and the annual interest rate may be increased or decreased under certain
series of Supplemental Indentures whereby DIRECTV agreed to fully guarantee all conditions, which include changes in DIRECTV U.S.’ long-term, unsecured debt
of the senior notes, jointly and severally with substantially all of DIRECTV ratings. The revolving credit facility has been fully and unconditionally guaranteed,
Holdings LLC’s domestic subsidiaries. The Supplemental Indentures provide that jointly and severally, by substantially all of DIRECTV U.S.’ domestic subsidiaries
DIRECTV unconditionally guarantees that the principal and interest on the on a senior unsecured basis. In January 2012, we borrowed $400 million under our
respective senior notes will be paid in full when due and that the obligations of the revolving credit facility.
Co-Issuers to the holders of the outstanding senior notes will be performed.
Covenants and Restrictions. The revolving credit facility requires DIRECTV
As a result of the guarantees, holders of the senior notes have the benefit of U.S. to maintain at the end of each fiscal quarter a specified ratio of indebtedness
DIRECTV’s interests in the assets and related earnings of our operations that are to adjusted net income. The revolving credit facility also includes covenants that
not held through DIRECTV Holdings LLC and its subsidiaries. Those operations restrict DIRECTV U.S.’ ability to, among other things, (i) incur additional
are primarily our direct-to-home digital television services throughout Latin America subsidiary indebtedness, (ii) incur liens, (iii) enter into certain transactions with
which are held by DIRECTV Latin America Holdings, Inc. and its subsidiaries and affiliates, (iv) merge or consolidate with another entity, (v) sell, assign, lease or
DIRECTV Sports Networks LLC and its subsidiaries which are comprised primarily otherwise dispose of all or substantially all of its assets, and (vi) change its lines of
of three regional sports television networks based in Seattle, Washington; Denver, business. Additionally, the senior notes contain restrictive covenants that are similar.
Colorado; and Pittsburgh, Pennsylvania. However, the subsidiaries that own and Should DIRECTV U.S. fail to comply with these covenants, all or a portion of its
operate the DIRECTV Latin America and DIRECTV Sports Networks operating borrowings under the senior notes could become immediately payable and its
segments have not guaranteed the senior notes. revolving credit facility could be terminated. As of December 31, 2011, DIRECTV
The guarantees are unsecured senior obligations of DIRECTV and rank U.S. management believes they are in compliance with all such covenants. The
equally in right of payment with all of DIRECTV’s existing and future senior debt senior notes and revolving credit facility also provide that the borrowings may be
and rank senior in right of payment to all of DIRECTV’s future subordinated debt, required to be prepaid if certain change-in-control events occur.
if any. The guarantees are effectively subordinated to all existing and future secured
obligations, if any, of DIRECTV to the extent of the value of the assets securing Contingencies
the obligations. DIRECTV will not be subject to the covenants contained in each Venezuela devaluation and exchange controls. In January 2010, the Venezuelan
indenture of the senior notes and our guarantees will terminate and be released on government announced the creation of a dual exchange rate system, including an
the terms set forth in each of the senior notes. exchange rate of 4.3 bolivars fuerte per U.S. dollar for most of the activities of our
Venezuelan operations compared to an exchange rate of 2.15 Venezuelan bolivars
fuerte prior to the announcement. As a result of this devaluation, we recorded a
$6 million charge to net income in the year ended December 31, 2010 related to
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