Twenty-First Century Fox 2008 Annual Report Download - page 70

NEWSCORP
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Debt Instruments and Guarantees
Debt Instruments (1)
2008 2007 2006
Years ended June 30, (in millions)
Borrowings
Notes due November 2037 $1,237 $ — $ —
Notes due March 2037 — 1,000 —
Notes due December 2035 — — 1,133
Bank loans 7 187 26
All other 48 9 —
Total borrowings $1,292 $ 1,196 $1,159
Repayments of borrowings
Notes due January 2008 $ (350) $ — $ —
Notes due February 2008 (2) (225) — —
Bank loans — (154) (10)
Liquid Yield Option™ Notes — — (831)
All other (153) (44) (24)
Total repayment of borrowings $ (728) $ (198) $(865)
(1) See Note 9 to the Consolidated Financial Statements of News Corporation for information with respect to borrowings.
(2) Debt acquired in the acquisition of Dow Jones. See Note 3 to the Consolidated Financial Statements of News Corporation.
LYONs
In February 2001, the Company issued Liquid Yield Option™ Notes (“LYONs”) which pay no interest and had an aggregate principal amount at
maturity of $1,515 million representing a yield of 3.5% per annum on the issue price. The holders may exchange the notes at any time into Class A
Common Stock or, at the option of the Company, the cash equivalent thereof at a fixed exchange rate of 24.2966 shares of Class A Common Stock
per $1,000 note. The LYONs are redeemable at the option of the holders on February 28, 2011 and February 28, 2016 at a price of $706.82 and
$840.73, respectively. The Company, at its election, may satisfy the redemption amounts in cash, Class A Common Stock or any combination
thereof. The Company can redeem the notes in cash at any time at specified redemption amounts.
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 statements of operations for the fiscal year ended June 30, 2006.
Ratings of the Public Debt
The table below summarizes the Company’s credit ratings as of June 30, 2008.
Rating Agency Senior Debt Outlook
Moody’s Baa 1 Stable
S&P BBB+ Stable
Revolving Credit Agreement
On May 23, 2007, News America Incorporated (“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
Company 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 pays a facility fee of 0.08% regardless of facility usage. The Company pays interest of a
margin over LIBOR for borrowings and a letter of credit fee of 0.27%. 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
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