Fox Corporation Form 8-K Summary
Reporting date: March 15, 2019. This current report documents Fox Corporation’s entry into two unsecured financing agreements in connection with its separation from Twenty-First Century Fox and related transactions. It does not report operating results for a fiscal period.
Material Financing Arrangements
- Revolving Credit Agreement: $1.0 billion, five-year unsecured revolving credit facility, maturing March 15, 2024. Fox may request increases to a maximum facility size of $1.5 billion.
- The facility includes a $150 million sublimit for U.S.-dollar letters of credit and may be used for general corporate purposes.
- Borrowings may bear interest at a base rate or LIBOR-based rate, with margins and facility fees determined by Fox’s long-term senior unsecured debt ratings. The filing does not provide the applicable margin or fee percentages.
- Bridge Credit Agreement: Up to $1.7 billion under an unsecured 364-day bridge term loan facility. The maturity is 364 calendar days after the date lenders are required to fund the loans.
- The bridge commitment period expires on the earlier of June 13, 2020, or termination of the merger agreement involving Twenty-First Century Fox and The Walt Disney Company.
- Bridge proceeds may fund or replenish cash used for an expected $8.5 billion dividend to Twenty-First Century Fox, transaction-related fees and expenses, and up to $500 million of general corporate purposes.
Terms, Covenants, and Liquidity Considerations
- Both agreements contain customary affirmative and negative covenants, including restrictions on liens, subsidiary debt, affiliate transactions, fundamental changes, changes in business, and certain uses of proceeds.
- Both facilities require Fox to maintain an operating income leverage ratio of 4.5 to 1.0, subject to a temporary increase for four quarters in certain material acquisitions.
- Bridge interest-rate margins increase by 0.25% every 90 days after the Bridge Closing Date.
- The bridge facility includes commitment fees on unused commitments and duration fees on outstanding advances of 0.50%, 0.75%, and 1.00% after 90, 180, and 270 days, respectively.
- Bridge borrowings are subject to mandatory prepayments or commitment reductions tied to specified debt or equity issuances, certain asset sales, and qualifying cash payments under the merger agreement.
- Covenant breaches or other events of default could allow lenders to terminate commitments or accelerate repayment obligations.
Outlook, Contingencies, and Unusual Items
The financing was arranged in anticipation of Fox’s separation from Twenty-First Century Fox and the related transactions, including the expected $8.5 billion dividend. The filing does not provide earnings guidance, revenue forecasts, cash-flow projections, or management commentary on operating performance.
The bridge facility is contingent on the transaction timetable and related merger agreement. Actual borrowing, funding dates, available commitments, and the ultimate effect on Fox’s debt and liquidity are not clearly stated in the filing text.
Most Important Facts to Verify
- Whether Fox ultimately drew on the $1.7 billion bridge facility and the amount outstanding.
- Whether the expected $8.5 billion dividend was paid and how it was funded.
- Fox’s debt balances, leverage ratio, liquidity, and compliance with the 4.5-to-1.0 covenant after the separation.
- The applicable interest-rate margins, facility fees, and any subsequent amendments or refinancing.
- The final maturity, renewal, termination, and commitment-reduction status of both facilities.
- Any subsequent events affecting the separation, merger agreement, or bridge financing commitments.