Twenty-First Century Fox 2007 Annual Report Download - page 90

NEWS CORPORATION
Notes to the Consolidated Financial Statements (continued)
On February 28, 2006, 92% of the LYONs were redeemed for cash at the specified redemption amount of $594.25 per LYON.
Accordingly, the Company paid an aggregate of approximately $831 million to the holders of the LYONs that had exercised this
redemption option. The pro-rata portion of unamortized deferred financing costs relating to the redeemed LYONs approximating
$13 million was recognized and included in Other, net in the consolidated statement of operations for the fiscal year ended June 30,
2006.
The LYONs constitute senior indebtedness of NAI and rank equal in right of payment with all present and future senior indebted-
ness of NAI. The Parent Guarantor has fully and unconditionally guaranteed the LYONs. The LYONs, which have been recorded at a
discount, are being accreted using the effective interest rate method.
f) See Note 10—Exchangeable Securities
Interest Expense, Net
Interest expense, net consists of:
2007 2006 2005
For the years ended June 30, (in millions)
Interest income $ 319 $ 246 $ 200
Interest expense (867) (819) (767)
Interest capitalized 24 28 31
Interest expense, net $(524) $(545) $(536)
Ratings of Public Debt
The table below summarizes the Company’s credit ratings as of June 30, 2007.
Rating Agency Senior Debt Outlook
Moody’s Baa 2 Stable
Standard & Poor’s BBB Stable
Original Currencies of Borrowings
Borrowings are payable in the following currencies:
2007 2006
As of June 30, (in millions)
United States Dollars $12,370 $11,312
Australian Dollars 127 111
Other currencies 54
Total borrowings $12,502 $11,427
At June 30, 2007, the impact of foreign currency movements on borrowings was not material.
In May 2007, NAI, a subsidiary of the Company, terminated its existing $1.75 billion Revolving Credit Agreement (the “Prior
Credit Agreement”) and entered into a new credit agreement (the “New Credit Agreement”), among NAI as Borrower, the Com-
pany as Parent Guarantor, the lenders named therein (the “Lenders”), Citibank, N.A. as Administrative Agent and JPMorgan Chase
Bank, N.A. as Syndication Agent. The New Credit Agreement consists of a $2.25 billion five-year unsecured revolving credit facility
with a sublimit of $600 million available for the issuance of letters of credit. Borrowings are in U.S. dollars only, while letters of credit
are issuable in U.S. Dollars or Euros. The significant terms of the New Credit Agreement include, among others, the requirement
that the Company maintain specific leverage ratios and limitations on secured indebtedness. The Company will pay a facility fee of
0.10% regardless of facility usage. The Company will pay interest of a margin over LIBOR for borrowings and a letter of credit fee of
0.30%. The Company is subject to additional fees of 0.05% if borrowings under the facility exceed 50% of the committed facility.
The interest and fees are based on the Company’s current debt rating. Under the New Credit Agreement, NAI may request an
increase in the amount of the credit facility up to a maximum amount of $2.5 billion. The New Credit Agreement is available for the
general corporate purposes of NAI, the Company and its subsidiaries. The maturity date is in May 2012, however, NAI may request
that the Lenders’ commitments be renewed for up to two additional one year periods. At June 30, 2007, letters of credit represent-
ing approximately $121 million were issued under the New Credit Agreement. The total unused credit facility under the New Credit
Agreement amounted to $2,129 million at June 30, 2007. The total unused credit facility under the Prior Credit Agreement
amounted to $1,570 million at June 30, 2006.
NEWS CORPORATION 2007 Annual Report 89