Item 8.01 Other Events
On March 6, 2020, The Walt Disney Company (the “Company”) entered into (i) a new $5.25 billion 364-Day Credit Agreement (the “new 364-Day Credit Agreement”) and (ii) a new $3 billion Five-Year Credit Agreement (the “new Five-Year Credit Agreement”), each of which supports the Company’s commercial paper borrowings and is available for other general corporate purposes.
The new 364-Day Credit Agreement replaces the $6 billion 364-Day Credit Agreement dated as of December 18, 2018 with TWDC Enterprises 18 Corp. (formerly known as The Walt Disney Company) (“TWDC Enterprises”), as borrower, and the Company (formerly known as TWDC Holdco 613 Corp.), as guarantor, which was scheduled to expire March 6, 2020, and the new Five-Year Credit Agreement replaces the $2.25 billion Five-Year Credit Agreement dated as of March 11, 2016 (as amended) with TWDC Enterprises, as borrower, and the Company, as guarantor, which was scheduled to expire March 11, 2021. These facilities were entered into prior to the Company’s acquisition on March 20, 2019 of the outstanding capital stock of Twenty-First Century Fox, Inc., which was subsequently renamed TFCF Corporation (“TFCF”) and the resulting restructure on such date whereby TWDC Enterprises became a wholly owned subsidiary of the Company.
The new 364-Day Credit Agreement will expire on March 5, 2021. Under the new 364-Day Credit Agreement, as with the former facility, the borrower has the option to extend the maturity date of all or a portion of advances outstanding at the time of maturity for one year. The new Five-Year Credit Agreement will expire on March 6, 2025. The new 364-Day Credit Agreement and the new Five-Year Credit Agreement each includes a guarantee by TWDC Enterprises of the Company’s payment obligations, which guarantees are subject to release and discharge upon certain circumstances. In addition, the provisions of the new 364-Day Credit Agreement and the new Five-Year Credit Agreement, including representations, warranties, covenants and events of default, are substantially similar to the provisions of the former facilities, modified to reflect the consummation of the acquisition of TFCF.
Under the new 364-Day Credit Agreement and the new Five-Year Credit Agreement, as with the respective former facilities, the borrower has the option to borrow at LIBOR-based rates (or a replacement rate if LIBOR is unavailable) plus a spread, subject to a cap and a floor that vary with the Company’s debt rating, depending on the credit default swap spread applicable to the Company’s senior, unsecured, non-credit enhanced long-term debt. The new facilities, as with the former facilities, contain only one financial covenant, relating to interest coverage, and specifically excludes certain entities, including Hong Kong Disneyland and Shanghai Disney Resort, from any representations, covenants or events of default.
Copies of the new 364-Day Credit Agreement and the new Five-Year Credit Agreement are filed herewith as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.