Washington Post 2015 Annual Report Download - page 76

unsecured notes due February 1, 2019; the interest on $400.0 million of 7.25% unsecured notes is payable
semiannually on February 1 and August 1. The Company’s borrowings at December 31, 2014, were mostly from
$400.0 million of 7.25% unsecured notes due February 1, 2019, and AUD 50 million revolving credit
borrowings. The Company did not have any outstanding commercial paper borrowing or USD revolving credit
borrowing as of December 31, 2015 and 2014. On March 9, 2015, the Company repaid the AUD 50 million debt.
The Company retired the Series A redeemable preferred stock with a cash payment of $10.5 million in October
2015.
On June 17, 2015, the Company terminated its U.S. $450 million, AUD 50 million four-year revolving credit
facility dated June 17, 2011. No borrowings were outstanding under the 2011 Credit Agreement at the time of
termination. On June 29, 2015, the Company entered into a credit agreement (the Credit Agreement) providing
for a new U.S. $200 million five-year revolving credit facility (the Facility) with each of the lenders party
thereto, Wells Fargo Bank, National Association as Administrative Agent (Wells Fargo), JPMorgan Chase Bank,
N.A., as Syndication Agent, and HSBC Bank USA, National Association, as Documentation Agent (the Credit
Agreement). The Company is required to pay a commitment fee on a quarterly basis, based on the Company’s
leverage ratio, of between 0.15% and 0.25% of the amount of the Facility. Any borrowings are made on an
unsecured basis and bear interest at the Company’s option, either at (a) a fluctuating interest rate equal to the
highest of Wells Fargo’s prime rate, 0.50 percent above the Federal funds rate or the one-month Eurodollar rate
plus 1%, or (b) the Eurodollar rate for the applicable interest period as defined in the Credit Agreement which is
generally a periodic rate equal to LIBOR, in each case plus an applicable margin that depends on the Company’s
consolidated debt to consolidated adjusted EBITDA (as determined pursuant to the Credit Agreement, “leverage
ratio”). The Company may draw on the Facility for general corporate purposes. The Facility will expire on
July 1, 2020, unless the Company and the banks agree to extend the term. Any outstanding borrowings must be
repaid on or prior to the final termination date. The Credit Agreement contains terms and conditions, including
remedies in the event of a default by the Company, typical of facilities of this type and requires the Company to
maintain a leverage ratio of not greater than 3.5 to 1.0 and a consolidated interest coverage ratio of at least 3.5 to
1.0 based upon the ratio of consolidated adjusted EBITDA to consolidated interest expense as determined
pursuant to the Credit Agreement. As of December 31, 2015, the Company is in compliance with all financial
covenants.
On September 7, 2011, the Company borrowed AUD 50 million under its revolving credit facility. On the same
date, the Company entered into interest rate swap agreements with a total notional value of AUD 50 million and
a maturity date of March 7, 2015. These interest rate swap agreements paid the Company variable interest on the
AUD 50 million notional amount at the three-month bank bill rate, and the Company paid the counterparties a
fixed rate of 4.5275%. These interest rate swap agreements were entered into to convert the variable rate
Australian dollar borrowing under the revolving credit facility into a fixed-rate borrowing. Based on the terms of
the interest rate swap agreements and the underlying borrowing, these interest rate swap agreements were
determined to be effective and thus qualified as a cash flow hedge. As such, any changes in the fair value of these
interest rate swaps were recorded in other comprehensive income on the Consolidated Balance Sheets until
earnings were affected by the variability of cash flows. On March 9, 2015, the Company repaid the AUD
50 million borrowed under its revolving credit facility. On the same day, the AUD 50 million interest rate swap
agreements matured.
On March 12, 2014, Moody’s placed the Company’s senior unsecured rating and its Prime-2 commercial paper
rating on review for downgrade. On June 26, 2014, Moody’s downgraded the Company’s long-term credit
ratings by two levels from “Baa1” to “Baa3” and downgraded the short-term rating by one level from Prime-2 to
Prime-3 and changed the outlook to stable. In November 2014, S&P placed the Company’s “BBB” corporate
credit rating and “A-2” commercial paper rating on Credit Watch with negative implications, and Moody’s
placed the Company’s “Baa3” senior unsecured rating under review for possible downgrade. On June 24, 2015,
related to the pending Cable ONE spin-off, Moody’s downgraded the Company’s long-term credit ratings from
“Baa3” to “Ba1” and the short-term rating from “Prime-3” to “NP”. On July 1, 2015, related to the Cable ONE
spin-off, S&P lowered its corporate credit rating from “BBB” to “BB+” and its short-term rating from “A-2” to
61 GRAHAM HOLDINGS COMPANY