Time Magazine 2010 Annual Report Download - page 93

The revolving bank credit facilities, commercial paper program and public debt of the Company rank pari passu
with the senior debt of the respective obligors thereon. The weighted-average interest rate on Time Warner’s total
debt was 6.52% December 31, 2010 and 6.86% at December 31, 2009.
Revolving Bank Credit Facilities and Commercial Paper Program
Revolving Bank Credit Facilities
Effective November 30, 2010, the Company reduced the commitments of the lenders under its $6.9 billion
senior unsecured five-year revolving credit facility to an aggregate amount equal to $5.0 billion (the “Prior Credit
Agreement”). The Prior Credit Agreement was scheduled to mature on February 17, 2011.
At December 31, 2010, there were no borrowings outstanding under the Prior Credit Agreement, $51 million in
outstanding face amount of letters of credit were issued under the Prior Credit Agreement and no commercial paper
was outstanding under the Company’s unsecured commercial paper program. At December 31, 2010, the Company
was in compliance with the leverage covenant, with a consolidated leverage ratio of approximately 2.01 times. The
Company’s unused committed capacity as of December 31, 2010 was $8.700 billion, including $3.663 billion of
cash and equivalents.
On January 19, 2011, the Company entered into two new senior unsecured revolving bank credit facilities
totaling $5.0 billion, consisting of a $2.5 billion three-year revolving credit facility (the “Three-Year Revolving
Credit Facility”) that matures on January 19, 2014 and a $2.5 billion five-year revolving credit facility (the “Five-
Year Revolving Credit Facility” and together with the Three-Year Revolving Credit Facility, the “Revolving Credit
Facilities”) that matures on January 19, 2016 pursuant to a credit agreement dated as of January 19, 2011 (the “New
Credit Agreement”). Concurrently with the effectiveness of the New Credit Agreement, the Company terminated
the Prior Credit Agreement. The permitted borrowers under the New Credit Agreement are Time Warner and Time
Warner International Finance Limited (“TWIFL” and together with Time Warner, the “Borrowers”).
Borrowings under the Revolving Credit Facilities bear interest at a rate determined by the debt rating for Time
Warner’s senior unsecured long-term debt and the percentage of commitments used under the facility. Based on the
debt rating as of January 19, 2011, borrowings under each of the Revolving Credit Facilities would bear interest at a
rate equal to LIBOR (TIBOR in the case of yen borrowings) plus 1.25% per annum if the percentage of
commitments used under the facility does not exceed 25% or LIBOR (TIBOR in the case of yen borrowings)
plus 1.50% per annum if the percentage of commitments used under the facility exceeds 25%. In addition, the
Borrowers are required to pay a facility fee on the aggregate commitments under the Revolving Credit Facilities at a
rate based on the debt rating for Time Warner’s senior unsecured long-term debt. Based on the debt rating as of
January 19, 2011, the facility fee was 0.225% per annum on the aggregate amount of commitments under the Three-
Year Revolving Credit Facility and 0.300% per annum on the aggregate amount of commitments under the Five-
Year Revolving Credit Facility.
The New Credit Agreement provides same-day funding and multi-currency capability, and a portion of the
commitment, not to exceed $500 million at any time, may be used for the issuance of letters of credit. The covenants
for the New Credit Agreement are substantially similar to those under the Prior Credit Agreement, including a
maximum consolidated leverage ratio covenant of 4.5 times the consolidated EBITDA of Time Warner, but
excluding any credit ratings-based defaults or covenants or any ongoing covenant or representations specifically
relating to a material adverse change in Time Warner’s financial condition or results of operations. The terms and
related financial metrics associated with the leverage ratio are defined in the credit agreements. Borrowings under
the Revolving Credit Facilities may be used for general corporate purposes, and unused credit is available to support
borrowings by Time Warner under its commercial paper program. The New Credit Agreement also contains certain
events of default customary for credit facilities of this type (with customary grace periods, as applicable). The
Borrowers may from time to time, so long as no default or event of default has occurred and is continuing, increase
the commitments under either or both of the Revolving Credit Facilities by up to $500 million per facility by adding
new commitments or increasing the commitments of willing lenders. The obligations of each of the Borrowers
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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)