Expedia 2015 Annual Report Download - page 118

August of each year, beginning August 15, 2016. We may redeem the 5.0% Notes at our option at any time in
whole or from time to time in part. If we elect to redeem the 5.0% Notes prior to November 12, 2025, we may
redeem them at a redemption price of 100% of the principal plus accrued interest, plus a “make-whole” premium.
If we elect to redeem the 5.0% Notes on or after November 12, 2025, we may redeem them at a redemption price
of 100% of the principal plus accrued interest. We also entered into a registrations rights agreement under which
we agreed to use commercially reasonable best efforts intend to file a registration statement to permit the
exchange of the 5.0% Notes for registered notes having the same financial terms and covenants as the privately
placed notes within 365 days of the issuance of the 5.0% Notes. If we fail to satisfy certain of its obligations
under the registration rights agreement, we will be required to pay additional interest of 0.25% per annum to the
holders of the 5.0% Notes until such registrations right default is cured.
The 7.456%, 5.95%, 4.5%, 2.5% and 5.0% Notes (collectively the “Notes”) are senior unsecured obligations
issued by Expedia and guaranteed by certain domestic Expedia subsidiaries. The Notes rank equally in right of
payment with all of our existing and future unsecured and unsubordinated obligations of Expedia and the
guarantor subsidiaries. For further information, see Note 22 — Guarantor and Non-Guarantor Supplemental
Financial Information. In addition, the Notes include covenants that limit our ability to (i) create certain liens,
(ii) enter into sale/leaseback transactions and (iii) merge or consolidate with or into another entity or transfer
substantially all of our assets. Accrued interest related to the Notes was $52 million and $39 million as of
December 31, 2015 and 2014. The 5.95%, 4.5%, 2.5% and 5.0% Notes are redeemable in whole or in part, at the
option of the holders thereof, upon the occurrence of certain change of control triggering events at a purchase
price in cash equal to 101% of the principal plus accrued and unpaid interest.
The approximate fair value of 7.456% Notes was $555 million and $581 million as of December 31, 2015
and 2014. The approximate fair value of 5.95% Notes was $827 million and $840 million as of December 31,
2015 and 2014. The approximate fair value of 4.5% Notes was $487 million and $504 million as of
December 31, 2015 and 2014. The approximate fair value of 2.5% Notes was Euro 644 million ($705 million) as
of December 31, 2015. The approximate fair value of 5.0% Notes was $750 million as of December 31,
2015.These fair values were based on quoted market prices in less active markets (Level 2 inputs).
Credit Facility
As of December 31, 2015, Expedia, Inc. maintained a $1 billion unsecured revolving credit facility with a
group of lenders that had a September 2019 maturity date, which was unconditionally guaranteed by certain
domestic Expedia subsidiaries that are the same as under the Notes. As of December 31, 2015 and 2014, we had
no revolving credit facility borrowings outstanding. The amount of stand-by letters of credit (“LOCs”) issued
under the facility reduces the credit amount available. As of December 31, 2015 and 2014, there was $29 million
and $15 million of outstanding stand-by LOCs issued under the facility. The facility contained various restrictive
covenants, including a maximum permissible leverage ratio and a minimum permissible interest coverage ratio,
and interest payable under the facility was based on the Company’s credit ratings. As of December 31, 2015, the
maximum permissible leverage ratio and the minimum interest coverage were both 3.25 to 1.00, the applicable
interest rate on drawn amounts was LIBOR plus 150 basis points and the commitment fee on undrawn amounts
was 20 basis points.
In February 2016, we entered into an amendment to the revolving credit facility that, among other things,
increased the aggregate commitments under the facility to $1.5 billion, extended the maturity date to February
2021, reduced the currently applicable interest rate on drawn amounts by 12.5 basis points to LIBOR plus 137.5
basis points and the commitment fee on undrawn amounts by 2.5 basis points to 17.5 basis points, increased the
maximum permissible leverage ratio to 3.75 to 1.00 and reduced the minimum permissible interest coverage ratio
to 3.00 to 1.00.
In addition, one of our international subsidiaries maintains a Euro 50 million uncommitted credit facility,
which is guaranteed by Expedia, Inc., that may be terminated at any time by the lender. As of December 31,
2015, we had Euro 20 million in borrowings outstanding included in accrued expenses and other current
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