DIRECTV 2012 Annual Report Download - page 99

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Revolving Credit Facilities the borrowings may be required to be prepaid if certain change-in-control events,
coupled with a ratings decline, occur.
On September 28, 2012, DIRECTV U.S.’ five year, $2.0 billion revolving
credit facility dated February 7, 2011 was terminated and replaced with a three and DIRECTV Guarantors. On November 14, 2011, we entered into a series of
one-half year, $1.0 billion revolving credit facility and a five year, $1.5 billion Supplemental Indentures whereby DIRECTV agreed to fully guarantee all of the
revolving credit facility. We pay a commitment fee of 0.15% per year for the senior notes then outstanding, jointly and severally with substantially all of
unused commitment under the revolving credit facilities. Borrowings currently bear DIRECTV Holdings LLC’s domestic subsidiaries. The Supplemental Indentures
interest at a rate equal to the London Interbank Offer Rate (LIBOR) plus 1.25%. provide that DIRECTV unconditionally guarantees that the principal and interest
Both the commitment fee and the annual interest rate may increase or decrease on the respective senior notes will be paid in full when due and that the obligations
under certain conditions due to changes in DIRECTV U.S.’ long-term, unsecured of the Co-Issuers to the holders of the outstanding senior notes will be performed.
debt ratings. Under certain conditions, DIRECTV U.S. may increase the borrowing All of the senior notes issued since November 14, 2011, the revolving credit
capacity of the revolving credit facilities by an aggregate amount of up to facilities and the commercial paper program are also similarly fully guaranteed by
$500 million. Aggregate amounts outstanding under the revolving credit facilities DIRECTV.
and the commercial paper program are limited to $2.5 billion. As of December 31, As a result of the guarantees, holders of the senior notes, the revolving credit
2012, there were no borrowings under the new revolving credit facilities. debt and the commercial paper have the benefit of DIRECTV’s interests in the
Borrowings under the revolving credit facilities are unsecured senior obligations assets and related earnings of our operations that are not held through DIRECTV
of DIRECTV U.S. and will rank equally in right of payment with all of Holdings LLC and its subsidiaries. Those operations are primarily our DTH digital
DIRECTV U.S.’ existing and future senior debt and will rank senior in right of television services throughout Latin America which are held by DIRECTV Latin
payment to all of DIRECTV U.S.’ future subordinated debt, if any. America Holdings, Inc. and its subsidiaries, and our regional sports networks which
are held by DIRECTV Sports Networks LLC and its subsidiaries. However, the
Covenants and Restrictions subsidiaries that own and operate the DIRECTV Latin America business and the
regional sports networks have not guaranteed the senior notes, the revolving credit
The revolving credit facilities require DIRECTV U.S. to maintain at the end facilities and the commercial paper.
of each fiscal quarter a specified ratio of indebtedness to earnings before interest,
taxes and depreciation and amortization. The revolving credit facilities also include The guarantees are unsecured senior obligations of DIRECTV and rank
covenants that restrict DIRECTV U.S.’ ability to, among other things, (i) incur equally in right of payment with all of DIRECTV’s existing and future senior debt
additional subsidiary indebtedness, (ii) incur liens, (iii) enter into certain and rank senior in right of payment to all of DIRECTV’s future subordinated debt,
transactions with affiliates, (iv) merge or consolidate with another entity, (v) sell, if any. The guarantees are effectively subordinated to all existing and future secured
assign, lease or otherwise dispose of all or substantially all of its assets, and obligations, if any, of DIRECTV to the extent of the value of the assets securing
(vi) change its lines of business. Additionally, the senior notes contain restrictive the obligations. DIRECTV will not be subject to the covenants contained in each
covenants that are similar. Should DIRECTV U.S. fail to comply with these indenture of the senior notes and our guarantees will terminate and be released on
covenants, all or a portion of its borrowings under the senior notes could become the terms set forth in each of the indentures.
immediately payable and its revolving credit facilities could be terminated. At
December 31, 2012, management believes DIRECTV U.S. was in compliance with Restricted Cash
all such covenants. The senior notes and revolving credit facilities also provide that Restricted cash of $6 million as of December 31, 2012 and $30 million as of
December 31, 2011 was included as part of ‘‘Prepaid expenses and other’’ in our
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