Debt and Capital Lease Obligations | 12 Months Ended |
Dec. 31, 2013 |
Debt and Capital Lease Obligations [Abstract] | ' |
Debt and Capital Lease Obligations | ' |
Debt and Capital Lease Obligations |
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The U.S. dollar equivalents of the components of our consolidated debt and capital lease obligations are as follows: |
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| December 31, 2013 | | Estimated fair value (c) | | Carrying value (d) |
Weighted | | Unused borrowing | |
average | capacity (b) |
interest | Borrowing | | U.S. $ | | December 31, | | December 31, |
rate (a) | currency | | equivalent | | 2013 | | 2012 | | 2013 | | 2012 |
| | | in millions |
Debt: | | | |
VM Notes | 6.36 | % | | | — | | | $ | — | | | $ | 9,188.70 | | | $ | — | | | $ | 9,150.10 | | | $ | — | |
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VM Credit Facility | 3.77 | % | | £ | 660 | | | 1,093.40 | | | 4,388.90 | | | — | | | 4,352.80 | | | — | |
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VM Convertible Notes (e) | 6.5 | % | | | — | | | — | | | 164.1 | | | — | | | 57.5 | | | — | |
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UPC Broadband Holding Bank Facility | 3.76 | % | | € | 1,046.20 | | | 1,442.60 | | | 5,717.80 | | | 5,494.40 | | | 5,671.40 | | | 5,466.80 | |
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UPC Holding Senior Notes | 7.51 | % | | | — | | | — | | | 3,297.40 | | | 3,190.00 | | | 3,099.20 | | | 2,905.90 | |
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UPCB SPE Notes | 6.88 | % | | | — | | | — | | | 4,536.50 | | | 4,502.30 | | | 4,219.50 | | | 4,145.20 | |
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Unitymedia KabelBW Notes | 6.89 | % | | | — | | | — | | | 8,058.20 | | | 7,416.50 | | | 7,651.90 | | | 6,815.50 | |
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Unitymedia KabelBW Revolving Credit Facilities | 3.27 | % | | € | 417.5 | | | 575.7 | | | — | | | — | | | — | | | — | |
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Telenet Credit Facility | 3.73 | % | | € | 158 | | | 217.9 | | | 1,956.90 | | | 1,860.00 | | | 1,936.90 | | | 1,853.70 | |
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Telenet SPE Notes | 5.93 | % | | | — | | | — | | | 2,916.50 | | | 2,777.60 | | | 2,759.20 | | | 2,641.00 | |
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Sumitomo Collar Loan (f) | 1.88 | % | | | — | | | — | | | 939.3 | | | 1,175.10 | | | 894.3 | | | 1,083.60 | |
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Ziggo Collar Loan (g) | 0.45 | % | | | — | | | — | | | 852.9 | | | — | | | 852.6 | | | — | |
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Liberty Puerto Rico Bank Facility | 6.89 | % | | $ | 15 | | | 15 | | | 666.2 | | | 667 | | | 665 | | | 663.9 | |
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Ziggo Margin Loan | 3.08 | % | | | — | | | — | | | 634.3 | | | — | | | 634.3 | | | — | |
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Vendor financing (h) | 3.56 | % | | | — | | | — | | | 603.1 | | | 276.8 | | | 603.1 | | | 276.8 | |
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Other (i) | 8.53 | % | | CLP | 585 | | | 1.2 | | | 308.2 | | | 282.5 | | | 308.2 | | | 282.5 | |
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Total debt | 5.55 | % | | | | | $ | 3,345.80 | | | $ | 44,229.00 | | | $ | 27,642.20 | | | 42,856.00 | | | 26,134.90 | |
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Capital lease obligations: | | | | | | | | | | | | | |
Unitymedia KabelBW (j) | 952 | | | 937.1 | |
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Telenet (k) | 451.2 | | | 405.1 | |
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Virgin Media | 373.5 | | | — | |
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Other subsidiaries | 71.6 | | | 47.4 | |
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Total capital lease obligations | 1,848.30 | | | 1,389.60 | |
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Total debt and capital lease obligations | 44,704.30 | | | 27,524.50 | |
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Current maturities | (1,023.4 | ) | | (363.5 | ) |
Long-term debt and capital lease obligations | $ | 43,680.90 | | | $ | 27,161.00 | |
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(a) | Represents the weighted average interest rate in effect at December 31, 2013 for all borrowings outstanding pursuant to each debt instrument including any applicable margin. The interest rates presented represent stated rates and do not include the impact of our interest rate derivative contracts, deferred financing costs, original issue premiums or discounts or commitment fees, all of which affect our overall cost of borrowing. Including the effects of derivative instruments, original issue premiums and discounts and commitment fees, but excluding the impact of financing costs, our weighted average interest rate on our aggregate variable- and fixed-rate indebtedness was 6.6% at December 31, 2013. For information concerning our derivative instruments, see note 6. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(b) | Unused borrowing capacity represents the maximum availability under the applicable facility at December 31, 2013 without regard to covenant compliance calculations or other conditions precedent to borrowing. At December 31, 2013, the full amount of unused borrowing capacity was available to be borrowed under each of the respective subsidiary facilities based on the applicable leverage and other financial covenants, except as noted below. At December 31, 2013, our availability under the VM Credit Facility, the UPC Broadband Holding Bank Facility and the Unitymedia KabelBW Revolving Credit Facilities (each credit facility as defined and described below) was limited to £653.6 million ($1,082.8 million), €432.3 million ($596.1 million) and €214.5 million ($295.8 million), respectively. When the relevant December 31, 2013 compliance reporting requirements have been completed and assuming no changes from December 31, 2013 borrowing levels, we anticipate that our availability under the VM Credit Facility, the UPC Broadband Holding Bank Facility and the Unitymedia KabelBW Revolving Credit Facilities will be limited to £622.0 million ($1,030.5 million), €726.7 million ($1,002.1 million) and €417.5 million ($575.7 million), respectively. In January 2014, the CLP 60.0 billion ($114.2 million) term loan bank facility of VTR Wireless (the VTR Wireless Bank Facility) was repaid in full and canceled. In addition to the limitations noted above, the debt instruments of our subsidiaries contain restricted payment tests that limit the amount that can be loaned or distributed to other Liberty Global subsidiaries and ultimately to Liberty Global. At December 31, 2013, these restrictions did not impact our ability to access the liquidity of our subsidiaries to satisfy our corporate liquidity needs beyond what is described above, except that the availability to be loaned or distributed by Virgin Media and Unitymedia KabelBW to other Liberty Global subsidiaries and ultimately to Liberty Global was limited to £305.2 million ($505.6 million) and €134.5 million ($185.5 million), respectively, and none of the liquidity of Liberty Puerto Rico was available to be loaned or distributed. When the relevant December 31, 2013 compliance reporting requirements have been completed and assuming no changes from December 31, 2013 borrowing levels, we anticipate that the availability of Virgin Media and Unitymedia KabelBW will be limited to £139.4 million ($230.9 million) and €367.4 million ($506.6 million), respectively, and none of the liquidity of Liberty Puerto Rico, will be available under these tests to be loaned or distributed. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(c) | The estimated fair values of our debt instruments were determined using the average of applicable bid and ask prices (mostly Level 1 of the fair value hierarchy) or, when quoted market prices are unavailable or not considered indicative of fair value, discounted cash flow models (mostly Level 2 of the fair value hierarchy). The discount rates used in the cash flow models are based on the market interest rates and estimated credit spreads of the applicable entity, to the extent available, and other relevant factors. For additional information concerning fair value hierarchies, see note 7. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(d) | Amounts include the impact of premiums and discounts, where applicable. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(e) | The amount reported in the estimated fair value column for the VM Convertible Notes represents the estimated fair value of the remaining VM Convertible Notes outstanding as of December 31, 2013, including both the debt and equity components. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(f) | For information regarding the Sumitomo Collar Loan, see note 6. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(g) | For information regarding the Ziggo Collar Loan, see note 6. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(h) | Represents amounts owed pursuant to interest-bearing vendor financing arrangements that are generally due within one year. At December 31, 2013 and 2012, the amounts owed pursuant to these arrangements include $47.3 million and $29.1 million, respectively, of value-added taxes that were paid on our behalf by the vendor. Repayments of vendor financing obligations are included in repayments and repurchases of debt and capital lease obligations in our consolidated statements of cash flows. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(i) | Includes outstanding borrowings under the VTR Wireless Bank Facility of $113.1 million and $91.9 million at December 31, 2013 and 2012, respectively. In January 2014, all outstanding amounts under the VTR Wireless Bank Facility were repaid and the VTR Wireless Bank Facility was canceled. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(j) | Primarily represents Unitymedia KabelBW’s obligations under duct network lease agreements with Deutsche Telekom AG (Deutsche Telekom) as the lessor. The original contracts were concluded in 2000 and 2001 and have indefinite terms, subject to certain mandatory statutory termination rights for either party after a term of 30 years. With certain limited exceptions, the lessor generally is not entitled to terminate these leases. For information regarding litigation involving these duct network lease agreements, see note 16. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(k) | At December 31, 2013 and 2012, Telenet’s capital lease obligations included €309.0 million ($426.1 million) and €284.4 million ($392.2 million), respectively, associated with Telenet’s lease of the broadband communications network of the four associations of municipalities in Belgium, which we refer to as the pure intercommunalues or the “PICs.” All capital expenditures associated with the PICs network are initiated by Telenet, but are executed and financed by the PICs through additions to this lease that are repaid over a 15-year term. These amounts do not include Telenet’s commitment related to certain operating costs associated with the PICs network. For additional information regarding this commitment, see note 16. | | | | | | | | | | | | | | | | | | | | | | | | | |
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VM Notes |
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At December 31, 2013, the following senior notes of certain Virgin Media subsidiaries were outstanding: |
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• | $507.1 million principal amount of 8.375% senior notes (the 2019 VM Dollar Senior Notes) and £253.5 million ($420.0 million) principal amount of 8.875% senior notes (the 2019 VM Sterling Senior Notes and, together with the 2019 VM Dollar Senior Notes, the 2019 VM Senior Notes). The 2019 VM Senior Notes were issued by Virgin Media Finance; | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | $1.0 billion principal amount of 6.50% senior secured notes (the 2018 VM Dollar Senior Secured Notes) and £875.0 million ($1,449.6 million) principal amount of 7.0% senior secured notes (the 2018 VM Sterling Senior Secured Notes and, together with the 2018 VM Dollar Senior Secured Notes, the 2018 VM Senior Secured Notes). The 2018 VM Senior Secured Notes were issued by Virgin Media Secured Finance PLC (Virgin Media Secured Finance), a wholly-owned subsidiary of Virgin Media; | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | $447.9 million principal amount of 5.25% senior secured notes (the January 2021 VM Dollar Senior Secured Notes) and £628.4 million ($1,041.1 million) principal amount of 5.50% senior secured notes (the January 2021 VM Sterling Senior Secured Notes and, together with the January 2021 VM Dollar Senior Secured Notes, the January 2021 VM Senior Secured Notes). The January 2021 VM Senior Secured Notes were issued by Virgin Media Secured Finance; | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | $95.0 million principal amount of 5.25% senior notes (the 2022 VM 5.25% Dollar Senior Notes); | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | $118.7 million principal amount of 4.875% senior notes (the 2022 VM 4.875% Dollar Senior Notes) and £44.1 million ($73.1 million) principal amount of 5.125% senior notes (the 2022 VM Sterling Senior Notes and, together with the 2022 VM 4.875% Dollar Senior Notes and the 2022 VM 5.25% Dollar Senior Notes, the 2022 VM Senior Notes). The 2022 VM Senior Notes were issued by Virgin Media Finance; | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | $1.0 billion principal amount of 5.375% senior secured notes (the April 2021 VM Dollar Senior Secured Notes) and £1.1 billion ($1.8 billion) principal amount of 6.0% senior secured notes (the April 2021 VM Sterling Senior Secured Notes and, together with the April 2021 VM Dollar Senior Secured Notes, the April 2021 VM Senior Secured Notes); and | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | $530.0 million principal amount of 6.375% senior notes (the 2023 VM Dollar Senior Notes) and £250.0 million ($414.2 million) principal amount of 7.0% senior notes (the 2023 VM Sterling Senior Notes and, together with the 2023 VM Dollar Senior Notes, the 2023 VM Senior Notes). | | | | | | | | | | | | | | | | | | | | | | | | | |
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The April 2021 VM Senior Secured Notes and the 2023 VM Senior Notes were originally issued by our subsidiaries in February 2013 in connection with the execution of the Virgin Media Merger Agreement. The net proceeds (after deducting certain transaction expenses) from the April 2021 VM Senior Secured Notes and the 2023 VM Senior Notes of $3,557.5 million (equivalent at the transaction date) were placed into the Virgin Media Escrow Accounts. Such net proceeds were released in connection with the closing of the Virgin Media Acquisition. In addition, upon completion of the Virgin Media Acquisition, the April 2021 VM Senior Secured Notes and the 2023 VM Senior Notes were pushed down to Virgin Media Secured Finance and Virgin Media Finance, respectively. |
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The 2018 VM Senior Secured Notes, the January 2021 VM Senior Secured Notes and the April 2021 VM Senior Secured Notes are collectively referred to as the “VM Senior Secured Notes.” The 2019 VM Senior Notes, the 2022 VM Senior Notes and the 2023 VM Senior Notes are collectively referred to as the “VM Senior Notes” (and together with the VM Senior Secured Notes, the VM Notes). |
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Under the terms of the applicable indentures, the completion of the Virgin Media Acquisition represented a “Change of Control” event that required Virgin Media Secured Finance and Virgin Media Finance, as applicable, to offer to repurchase the January 2021 VM Senior Secured Notes and the 2022 VM Senior Notes at a repurchase price of 101% of par. In this regard, on June 11, 2013, Virgin Media Secured Finance and Virgin Media Finance, as applicable, redeemed (i) $52.1 million of the January 2021 VM Dollar Senior Secured Notes, (ii) £21.6 million ($35.8 million) of the January 2021 VM Sterling Senior Secured Notes, (iii) $405.0 million of the 2022 VM 5.25% Dollar Senior Notes, (iv) $781.3 million of the 2022 VM 4.875% Dollar Senior Notes and (v) £355.9 million ($589.6 million) of the 2022 VM Sterling Senior Notes. With respect to the 2019 VM Senior Notes and the 2018 VM Senior Secured Notes, Virgin Media previously had obtained consent from holders of such notes to waive its repurchase obligations under the respective indentures related to the “Change of Control” provisions. The Virgin Media Acquisition did not constitute a “Change of Control” event under the indentures governing the April 2021 VM Senior Secured Notes and the 2023 VM Senior Notes. |
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The details of the VM Notes as of December 31, 2013 are summarized in the following table: |
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amount | | | | | | |
VM Notes | | Maturity | | Interest | | Borrowing | | U.S. $ | | Estimated | | Carrying | | | | | | |
rate | currency | equivalent | fair value | value (a) | | | | | | |
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2018 VM Dollar Senior Secured Notes | January 15, 2018 | | 6.50% | | $ | 1,000.00 | | | $ | 1,000.00 | | | $ | 1,038.10 | | | $ | 1,042.50 | | | | | | | |
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2018 VM Sterling Senior Secured Notes | January 15, 2018 | | 7.00% | | £ | 875 | | | 1,449.60 | | | 1,507.60 | | | 1,515.40 | | | | | | | |
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2019 VM Dollar Senior Notes | October 15, 2019 | | 8.38% | | $ | 507.1 | | | 507.1 | | | 554 | | | 557.1 | | | | | | | |
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2019 VM Sterling Senior Notes | October 15, 2019 | | 8.88% | | £ | 253.5 | | | 420 | | | 458.8 | | | 459.7 | | | | | | | |
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January 2021 VM Dollar Senior Secured Notes | January 15, 2021 | | 5.25% | | $ | 447.9 | | | 447.9 | | | 458.5 | | | 462.1 | | | | | | | |
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January 2021 VM Sterling Senior Secured Notes | January 15, 2021 | | 5.50% | | £ | 628.4 | | | 1,041.10 | | | 1,050.80 | | | 1,057.30 | | | | | | | |
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April 2021 VM Dollar Senior Secured Notes | April 15, 2021 | | 5.38% | | $ | 1,000.00 | | | 1,000.00 | | | 1,008.80 | | | 1,000.00 | | | | | | | |
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April 2021 VM Sterling Senior Secured Notes | April 15, 2021 | | 6.00% | | £ | 1,100.00 | | | 1,822.40 | | | 1,880.40 | | | 1,822.40 | | | | | | | |
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2022 VM 5.25% Dollar Senior Notes | February 15, 2022 | | 5.25% | | $ | 95 | | | 95 | | | 84.6 | | | 95.9 | | | | | | | |
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2022 VM 4.875% Dollar Senior Notes | February 15, 2022 | | 4.88% | | $ | 118.7 | | | 118.7 | | | 104 | | | 119.7 | | | | | | | |
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2022 VM Sterling Senior Notes | February 15, 2022 | | 5.13% | | £ | 44.1 | | | 73.1 | | | 67.7 | | | 73.8 | | | | | | | |
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2023 VM Dollar Senior Notes | April 15, 2023 | | 6.38% | | $ | 530 | | | 530 | | | 542.9 | | | 530 | | | | | | | |
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2023 VM Sterling Senior Notes | April 15, 2023 | | 7.00% | | £ | 250 | | | 414.2 | | | 432.5 | | | 414.2 | | | | | | | |
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Total | | $ | 8,919.10 | | | $ | 9,188.70 | | | $ | 9,150.10 | | | | | | | |
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(a) | Amounts include the impact of premiums and discounts, where applicable, including amounts recorded in connection with the acquisition accounting for the Virgin Media Acquisition. | | | | | | | | | | | | | | | | | | | | | | | | | |
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The VM Senior Notes are unsecured senior obligations of Virgin Media Finance that rank equally with all of the existing and future senior debt of Virgin Media Finance and are senior to all existing and future subordinated debt of Virgin Media Finance. The VM Senior Notes are guaranteed on a senior basis by Virgin Media and certain of its subsidiaries, and on a senior subordinated basis by VMIH and Virgin Media Investments Limited. |
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The VM Senior Secured Notes are senior obligations of Virgin Media Secured Finance that rank equally with all of the existing and future senior debt of Virgin Media Secured Finance and are senior to all existing and future subordinated debt of Virgin Media Secured Finance. The VM Senior Secured Notes are guaranteed on a senior basis by Virgin Media and certain subsidiaries of Virgin Media (the VM Senior Secured Guarantors), and are secured by liens on substantially all of the assets of Virgin Media Secured Finance and the VM Senior Secured Guarantors (except for Virgin Media). The VM Notes contain certain customary incurrence-based covenants. For example, the ability to raise certain additional debt and make certain distributions or loans to other subsidiaries of Liberty Global is subject to a Consolidated Leverage Ratio test, as defined in the applicable indenture. In addition, the VM Notes provide that any failure to pay principal prior to expiration of any applicable grace period, or any acceleration with respect to other indebtedness of £50.0 million (€82.8 million) or more in the aggregate of Virgin Media, Virgin Media Finance, Virgin Media Secured Finance or VMIH (as applicable under the relevant indenture), or the Restricted Subsidiaries (as defined in the applicable indenture) is an event of default under the VM Notes. |
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Subject to the circumstances described below, the January 2021 VM Senior Secured Notes and the 2022 VM Senior Notes are non-callable. At any time prior to maturity, Virgin Media Secured Finance or Virgin Media Finance (as applicable) may redeem some or all of the January 2021 VM Senior Secured Notes or the 2022 VM Senior Notes (as applicable) by paying a “make-whole” premium, which is the present value of all remaining scheduled interest payments to (i) January 15, 2021 using the discount rate (as specified in the applicable indenture) as of the applicable redemption date plus 25 basis points in the case of the January 2021 VM Senior Secured Notes or (ii) February 15, 2022 using the discount rate (as specified in the applicable indenture) as of the applicable redemption date plus 50 basis points in the case of the 2022 VM Senior Notes. |
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Subject to the circumstances described below, the 2018 VM Senior Secured Notes are non-callable until January 15, 2014, the 2019 VM Senior Notes are non-callable until October 15, 2014, the April 2021 VM Senior Secured Notes are non-callable until April 15, 2017 and the 2023 VM Senior Notes are non-callable until April 15, 2018. At any time prior to January 15, 2014, in the case of the 2018 VM Senior Secured Notes, October 15, 2014, in the case of the 2019 VM Senior Notes, April 15, 2017, in the case of the April 2021 VM Senior Secured Notes or April 15, 2018, in the case of the 2023 VM Senior Notes, Virgin Media Secured Finance and Virgin Media Finance (as applicable) may redeem some or all of the 2018 VM Senior Secured Notes, the 2019 VM Senior Notes, the April 2021 VM Senior Secured Notes or the 2023 VM Senior Notes (as applicable) by paying a “make-whole” premium, which is the present value of all remaining scheduled interest payments to January 15, 2014, October 15, 2014, April 15, 2017 or April 15, 2018 (as applicable) using the discount rate (as specified in the applicable indenture) as of the redemption date plus 50 basis points. |
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Virgin Media Finance and Virgin Media Secured Finance (as applicable) may redeem some or all of the 2018 VM Senior Secured Notes, the 2019 VM Senior Notes, the April 2021 VM Senior Secured Notes or the 2023 VM Senior Notes at the following redemption prices (expressed as a percentage of the principal amount) plus accrued and unpaid interest and Additional Amounts (as defined in the applicable indenture), if any, to the applicable redemption date, if redeemed during the twelve-month period commencing on January 15, in the case of the 2018 VM Senior Secured Notes, October 15, in the case of the 2019 VM Senior Notes, or April 15, in the case of the April 2021 VM Senior Secured Notes and the 2023 VM Senior Notes, of the years set forth below: |
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| | Redemption price | | | | | | | | | | |
Year | | 2018 VM Dollar Senior Secured Notes | | 2018 VM Sterling Senior Secured Notes | | 2019 VM Dollar Senior Notes | | 2019 VM Sterling Senior Notes | | April 2021 VM Dollar Senior Secured Notes | | April 2021 VM Sterling Senior Secured Notes | | 2023 VM Dollar Senior Notes | | 2023 VM Sterling Senior Notes | | | | | | | | | | |
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2014 | 103.25% | | 103.50% | | 104.19% | | 104.44% | | N.A. | | N.A. | | N.A. | | N.A. | | | | | | | | | | |
2015 | 101.63% | | 101.75% | | 102.79% | | 102.96% | | N.A. | | N.A. | | N.A. | | N.A. | | | | | | | | | | |
2016 | 100.00% | | 100.00% | | 101.40% | | 101.48% | | N.A. | | N.A. | | N.A. | | N.A. | | | | | | | | | | |
2017 | 100.00% | | 100.00% | | 100.00% | | 100.00% | | 102.69% | | 103.00% | | N.A. | | N.A. | | | | | | | | | | |
2018 | N.A. | | N.A. | | 100.00% | | 100.00% | | 101.34% | | 101.50% | | 103.19% | | 103.50% | | | | | | | | | | |
2019 | N.A. | | N.A. | | N.A. | | N.A. | | 100.00% | | 100.00% | | 102.13% | | 102.33% | | | | | | | | | | |
2020 | N.A. | | N.A. | | N.A. | | N.A. | | 100.00% | | 100.00% | | 101.06% | | 101.67% | | | | | | | | | | |
2021 and thereafter | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | 100.00% | | 100.00% | | | | | | | | | | |
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VM Credit Facility |
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On June 7, 2013, VMIH, together with certain other subsidiaries of Virgin Media as borrowers and guarantors (the Virgin Media Borrowing Group) entered into a new senior secured credit facility agreement, as amended and restated on June 14, 2013 (the VM Credit Facility), pursuant to which the lenders thereunder agreed to provide the borrowers with (i) a £375.0 million ($621.3 million) term loan (VM Facility A), (ii) a $2,755.0 million term loan (VM Facility B), (iii) a £600.0 million ($994.0 million) term loan (VM Facility C) and (iv) a £660.0 million ($1,093.4 million) revolving credit facility (the VM Revolving Facility). With the exception of the VM Revolving Facility, all available amounts were borrowed under the VM Credit Facility in June 2013. |
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The VM Credit Facility requires that certain members of the Virgin Media Borrowing Group that generate not less than 80% of such group’s EBITDA (as defined in the VM Credit Facility) in any financial year, guarantee the payment of all sums payable under the VM Credit Facility and such group members are required to grant first-ranking security over all or substantially all of their assets to secure the payment of all sums payable. In addition, the holding company of each borrower must give a share pledge over its shares in such borrower. |
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In addition to mandatory prepayments which must be made for certain disposal proceeds (subject to certain de minimis thresholds), the lenders may cancel their commitments and declare the loans due and payable after 30 business days following the occurrence of a change of control in respect of VMIH, subject to certain exceptions. |
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The VM Credit Facility contains certain customary events of default, the occurrence of which, subject to certain exceptions and materiality qualifications, would allow the lenders to (i) cancel the total commitments, (ii) accelerate all outstanding loans and terminate their commitments thereunder and/or (iii) declare that all or part of the loans be payable on demand. The VM Credit Facility contains certain representations and warranties customary for facilities of this type, which are subject to exceptions, baskets and materiality qualifications. |
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The VM Credit Facility restricts the ability of certain members of the Virgin Media Borrowing Group to, among other things, (i) incur or guarantee certain financial indebtedness, (ii) make certain disposals and acquisitions and (iii) create certain security interests over their assets, in each case, subject to carve-outs from such limitations. |
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The VM Credit Facility requires the borrowers to observe certain affirmative undertakings or covenants, which covenants are subject to materiality and other customary and agreed exceptions. In addition, the VM Credit Facility also requires compliance with various financial covenants such as Senior Net Debt to Annualized EBITDA and Total Net Debt to Annualized EBITDA, each capitalized term as defined in the VM Credit Facility. |
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In addition to customary default provisions, the VM Credit Facility provides that any event of default with respect to indebtedness of £50.0 million ($82.8 million) or more in the aggregate of Virgin Media Finance PLC (Virgin Media Finance), a wholly-owned subsidiary of Virgin Media, and its subsidiaries is an event of default under the VM Credit Facility. |
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The VM Credit Facility permits certain members of the Virgin Media Borrowing Group to make certain distributions and restricted payments to its parent company (and indirectly to Liberty Global) through loans, advances or dividends subject to compliance with applicable covenants. |
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The details of our borrowings under the VM Credit Facility as of December 31, 2013 are summarized in the following table: |
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Facility | | Final maturity date | | Interest rate | | Facility amount | | Unused | | Carrying | | | | | | | | | | |
(in borrowing | borrowing | value (b) | | | | | | | | | | |
currency) | capacity (a) | | | | | | | | | | | |
| | | | | | in millions | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
A | June 7, 2019 | | LIBOR + 3.25% | | £ | 375 | | | $ | — | | | $ | 621.2 | | | | | | | | | | | |
| | | | | | | | | |
B | June 7, 2020 | | LIBOR + 2.75% (c) | | $ | 2,755.00 | | | — | | | 2,742.20 | | | | | | | | | | | |
| | | | | | | | | |
C | June 7, 2020 | | LIBOR + 3.75% (c) | | £ | 600 | | | — | | | 989.4 | | | | | | | | | | | |
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Revolving Facility | June 7, 2019 | | LIBOR + 3.25% | | £ | 660 | | | 1,093.40 | | | — | | | | | | | | | | | |
| | | | | | | | | |
Total | | $ | 1,093.40 | | | $ | 4,352.80 | | | | | | | | | | | |
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_______________ |
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(a) | At December 31, 2013, our availability was limited to £653.6 million ($1,082.8 million). When the relevant December 31, 2013 compliance reporting requirements have been completed and assuming no changes from December 31, 2013 borrowing levels, we anticipate that our availability will be limited to £622.0 million ($1,030.5 million). The VM Revolving Facility has a commitment fee on unused and uncanceled balances of 1.3% per year. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(b) | The carrying values of VM Facilities B and C include the impact of discounts. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(c) | VM Facilities B and C have a LIBOR floor of 0.75%. | | | | | | | | | | | | | | | | | | | | | | | | | |
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VM Convertible Notes |
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In April 2008, Virgin Media issued $1.0 billion principal amount of 6.50% convertible senior notes (the VM Convertible Notes), pursuant to an indenture (as supplemented, the VM Convertible Notes Indenture). The VM Convertible Notes mature on November 15, 2016, unless the VM Convertible Notes are exchanged or repurchased prior thereto pursuant to the terms of the VM Convertible Notes Indenture. |
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As a result of the application of acquisition accounting in connection with the Virgin Media Acquisition, the $2,716.8 million estimated fair value of the VM Convertible Notes at June 7, 2013 was allocated between the respective debt and equity components. The portion allocated to the debt component of $1,056.8 million was measured based on the estimated fair value of a debt instrument that has the same terms as the VM Convertible Notes without the conversion feature. The amount allocated to the debt component resulted in a premium to the principal amount of the VM Convertible Notes. The $1,660.0 million portion allocated to the equity component was recorded as an increase to additional paid-in capital in our consolidated statement of equity. |
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The VM Convertible Notes are exchangeable under certain conditions for (subject to further adjustment as provided in the VM Convertible Notes Indenture and subject to Virgin Media’s right to settle in cash or a combination of Liberty Global ordinary shares and cash) 13.4339 of our Class A ordinary shares, 10.0312 of our Class C ordinary shares and $910.51 in cash (without interest) for each $1,000 in principal amount of VM Convertible Notes exchanged. The circumstances under which the VM Convertible Notes are exchangeable are more fully described in the VM Convertible Notes Indenture, including, for example, based on the relationship of the value of the Virgin Media Merger Consideration to the conversion price of the VM Convertible Notes. Based on the trading prices of our Class A and Class C ordinary shares during a specified period, as provided for in the VM Convertible Notes Indenture, the VM Convertible Notes are currently exchangeable. Because the Virgin Media Acquisition constituted a “Fundamental Change” and a “Make-Whole Fundamental Change” under the VM Convertible Notes Indenture, a holder of the VM Convertible Notes who exchanged such notes at any time from June 7, 2013 through July 9, 2013 received 13.8302 Class A ordinary shares, 10.3271 Class C ordinary shares and $937.37 in cash (without interest) for each $1,000 in principal amount of VM Convertible Notes exchanged. |
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As of December 31, 2013, an aggregate of $944.2 million principal amount of VM Convertible Notes had been exchanged following the Virgin Media Acquisition for 13.1 million Class A and 9.8 million Class C ordinary shares and $885.1 million of cash. The difference between the cash portion of the exchange consideration and the aggregate $998.8 million fair value of the exchanged VM Convertible Notes on the exchange dates resulted in a net increase to equity of $113.7 million. No gain or loss on extinguishment was recorded for these exchanges as the debt component of the VM Convertible Notes was measured at fair value shortly before the exchanges pursuant to the application of acquisition accounting in connection with the Virgin Media Acquisition. After giving effect to all exchanges completed, the remaining principal amount outstanding under the VM Convertible Notes was $54.8 million as of December 31, 2013. |
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The VM Convertible Notes are senior unsecured obligations of Virgin Media that rank equally in right of payment with all of Virgin Media’s existing and future senior and unsecured indebtedness and ranks senior in right to all of Virgin Media’s existing and future subordinated indebtedness. The VM Convertible Notes are effectively subordinated to all existing and future indebtedness and other obligations of Virgin Media’s subsidiaries. The VM Convertible Notes Indenture does not contain any financial or restrictive covenants. The VM Convertible Notes are non-callable. |
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UPC Broadband Holding Bank Facility |
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The UPC Broadband Holding Bank Facility, as amended from time to time, is the senior secured credit facility of UPC Broadband Holding. The security package for the UPC Broadband Holding Bank Facility includes a pledge over the shares of UPC Broadband Holding and the shares of certain of UPC Broadband Holding’s majority-owned operating companies. The UPC Broadband Holding Bank Facility is also guaranteed by UPC Holding, the immediate parent of UPC Broadband Holding, and is senior to other long-term debt obligations of UPC Broadband Holding and UPC Holding. The agreement governing the UPC Broadband Holding Bank Facility contains covenants that limit, among other things, UPC Broadband Holding’s ability to merge with or into another company, acquire other companies, incur additional debt, dispose of assets, make distributions or pay dividends, provide loans and guarantees and enter into hedging agreements. In addition to customary default provisions, including defaults on other indebtedness of UPC Broadband Holding and its subsidiaries, the UPC Broadband Holding Bank Facility provides that any event of default with respect to indebtedness of €50.0 million ($68.9 million) or more in the aggregate of (i) Liberty Global Europe, Inc. (the indirect parent of Liberty Global Europe), (ii) any other company of which UPC Broadband Holding is a subsidiary and which is a subsidiary of Liberty Global Europe and (iii) UPC Holding II BV (a subsidiary of UPC Holding) is an event of default under the UPC Broadband Holding Bank Facility. |
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The UPC Broadband Holding Bank Facility permits UPC Broadband Holding to transfer funds to its parent company (and indirectly to Liberty Global) through loans, advances or dividends provided that UPC Broadband Holding maintains compliance with applicable covenants. If a Change of Control occurs, as defined in the UPC Broadband Holding Bank Facility, the facility agent may (if required by the majority lenders) cancel each facility and declare all outstanding amounts immediately due and payable. The UPC Broadband Holding Bank Facility requires compliance with various financial covenants such as: (i) Senior Debt (after deducting cash and cash equivalent investments) to Annualized EBITDA, (ii) EBITDA to Total Cash Interest, (iii) EBITDA to Senior Debt Service, (iv) EBITDA to Senior Interest and (v) Total Debt (after deducting cash and cash equivalent investments) to Annualized EBITDA, each capitalized term as defined in the UPC Broadband Holding Bank Facility. |
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The covenant in the UPC Broadband Holding Bank Facility relating to disposals of assets includes a basket for permitted disposals of assets, the Annualized EBITDA of which does not exceed a certain percentage of the Annualized EBITDA of the Borrower Group, each capitalized term as defined in the UPC Broadband Holding Bank Facility. The UPC Broadband Holding Bank Facility includes a recrediting mechanism, in relation to the permitted disposals basket, based on the proportion of net sales proceeds that are (i) used to prepay facilities and (ii) reinvested in the Borrower Group. |
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The UPC Broadband Holding Bank Facility includes a mandatory prepayment requirement of four times Annualized EBITDA of certain disposed assets. The prepayment amount may be allocated to one or more of the facilities at UPC Broadband Holding’s discretion and then applied to the loans under the relevant facility on a pro rata basis. A prepayment may be waived by the majority lenders subject to the requirement to maintain pro forma covenant compliance. If the mandatory prepayment amount is less than €100.0 million ($137.9 million), then no prepayment is required (subject to pro forma covenant compliance). No such prepayment is required to be made where an amount, equal to the amount that would otherwise be required to be prepaid, is deposited in a blocked account on terms that the principal amount deposited may only be released in order to make the relevant prepayment or to reinvest in assets in accordance with the terms of the UPC Broadband Holding Bank Facility, which expressly includes permitted acquisitions and capital expenditures. Any amounts deposited in the blocked account that have not been reinvested (or contracted to be so reinvested), within 12 months of the relevant permitted disposal, are required to be applied in prepayment in accordance with the terms of the UPC Broadband Holding Bank Facility. |
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The details of our borrowings under the UPC Broadband Holding Bank Facility as of December 31, 2013 are summarized in the following table: |
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Facility | | Final maturity date | | Interest rate | | Facility amount | | Unused | | Carrying | | | | | | | | | | |
(in borrowing | borrowing | value (c) | | | | | | | | | | |
currency) (a) | capacity (b) | | | | | | | | | | | |
| | | | | | in millions | | | | | | | | | | |
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Q | July 31, 2014 | | EURIBOR + 2.75% | | € | 30 | | | $ | 41.4 | | | $ | — | | | | | | | | | | | |
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R (e) | December 31, 2015 | | EURIBOR + 3.25% | | € | 111 | | | — | | | 153.1 | | | | | | | | | | | |
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S (e) | December 31, 2016 | | EURIBOR + 3.75% | | € | 545.5 | | | — | | | 752.2 | | | | | | | | | | | |
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V (d) | January 15, 2020 | | 7.63% | | € | 500 | | | — | | | 689.5 | | | | | | | | | | | |
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Y (d) | July 1, 2020 | | 6.38% | | € | 750 | | | — | | | 1,034.20 | | | | | | | | | | | |
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Z (d) | July 1, 2020 | | 6.63% | | $ | 1,000.00 | | | — | | | 1,000.00 | | | | | | | | | | | |
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AC (d) | November 15, 2021 | | 7.25% | | $ | 750 | | | — | | | 750 | | | | | | | | | | | |
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AD (d) | January 15, 2022 | | 6.88% | | $ | 750 | | | — | | | 750 | | | | | | | | | | | |
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AE (e) | December 31, 2019 | | EURIBOR + 3.75% | | € | 602.5 | | | — | | | 830.7 | | | | | | | | | | | |
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AF | January 31, 2021 | | LIBOR + 3.00% (f) | | $ | 500 | | | — | | | 495.1 | | | | | | | | | | | |
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AG | March 31, 2021 | | EURIBOR + 3.75% | | € | 1,554.40 | | | — | | | 2,138.70 | | | | | | | | | | | |
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AH | June 30, 2021 | | LIBOR + 2.50% (f) | | $ | 1,305.00 | | | — | | | 1,301.60 | | | | | | | | | | | |
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AI | April 30,2019 | | EURIBOR + 3.25% | | € | 1,016.20 | | | 1,401.20 | | | — | | | | | | | | | | | |
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Elimination of Facilities V, Y, Z, AC and AD in consolidation (d) | | — | | | (4,223.7 | ) | | | | | | | | | | |
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Total | | $ | 1,442.60 | | | $ | 5,671.40 | | | | | | | | | | | |
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_______________ |
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(a) | Except as described in (d) below, amounts represent total third-party facility amounts at December 31, 2013 without giving effect to the impact of discounts. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(b) | At December 31, 2013, our availability under the UPC Broadband Holding Bank Facility was limited to €432.3 million ($596.1 million). When the relevant December 31, 2013 compliance reporting requirements have been completed, we anticipate that our availability under the UPC Broadband Holding Bank Facility will be limited to €726.7 million ($1,002.1 million). Facilities Q and AI have commitment fees on unused and uncanceled balances of 0.75% and 1.3% per year, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(c) | The carrying values of Facilities AF, AG and AH include the impact of discounts. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(d) | As further discussed in the below description of the UPCB SPE Notes, the amounts outstanding under Facilities V, Y, Z, AC and AD are eliminated in Liberty Global’s consolidated financial statements. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(e) | Subsequent to December 31, 2013, all of the borrowings under Facilities R, S and AE were repaid . For additional information, see note 19. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(f) | Facilities AF and AH have LIBOR floors of 1.00% and 0.75%, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | |
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Refinancing Transactions. During 2013, 2012 and 2011, we completed a number of refinancing transactions that generally resulted in additional borrowings or extended maturities under the the UPC Broadband Holding Bank Facility. In connection with these transactions, we recognized losses on debt modification and extinguishment of $11.9 million, $16.3 million and $15.7 million during 2013, 2012 and 2011, respectively. These losses include (i) write-offs of deferred financing costs and unamortized discounts of $4.2 million, $14.3 million, and $15.7 million, respectively, and (ii) $7.7 million, $2.0 million and nil of third-party debt modification costs, respectively. |
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UPC Holding Senior Notes |
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2013 Transactions. On March 26, 2013, UPC Holding issued (i) €450.0 million ($620.5 million) principal amount of 6.75% senior notes (the UPC Holding 6.75% Euro Senior Notes) and (ii) CHF 350.0 million ($393.9 million) principal amount of 6.75% senior notes (the UPC Holding 6.75% CHF Senior Notes and, together with the UPC Holding 6.75% Euro Senior Notes, the UPC Holding 6.75% Senior Notes). The UPC Holding 6.75% Senior Notes mature on March 15, 2023. |
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On April 25, 2013, the net proceeds from the issuance of the UPC Holding 6.75% Senior Notes were used to redeem in full (a) UPC Holding’s €300.0 million ($413.7 million) principal amount of 8.0% senior notes due 2016 (the UPC Holding 8.0% Senior Notes) and (b) UPC Holding’s €400.0 million ($551.6 million) principal amount of 9.75% senior notes due 2018 (the UPC Holding 9.75% Senior Notes). Our obligations with respect to the UPC Holding 8.0% Senior Notes and the UPC Holding 9.75% Senior Notes were legally discharged with the trustee on March 26, 2013 and March 27, 2013, respectively, in connection with the issuance of the UPC Holding 6.75% Senior Notes. The trustee, in turn, paid all amounts due to the holders of the UPC Holding 8.0% Senior Notes and UPC Holding 9.75% Senior Notes on April 25, 2013. We incurred aggregate debt extinguishment losses of $85.5 million during the first quarter of 2013, which include (i) $35.6 million of redemption premiums related to the UPC Holding 8.0% Senior Notes and the UPC Holding 9.75% Senior Notes, (ii) the write-off of $24.5 million of unamortized discount related to the UPC Holding 9.75% Senior Notes, (iii) the write-off of $19.0 million of deferred financing costs associated with the UPC Holding 8.0% Senior Notes and the UPC Holding 9.75% Senior Notes and (iv) $6.4 million of aggregate interest incurred on the UPC Holding 8.0% Senior Notes and the UPC Holding 9.75% Senior Notes between the respective dates that we and the trustee were legally discharged, as described above. |
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2012 Transaction. On September 21, 2012, UPC Holding issued €600.0 million ($827.4 million) principal amount of 6.375% senior notes (the UPC Holding 6.375% Senior Notes) at an issue price of 99.094%, resulting in cash proceeds before commissions and fees of €594.6 million ($773.1 million at the transaction date). |
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We collectively refer to the UPC Holding 6.75% Senior Notes, the UPC Holding 6.375% Senior Notes, UPC Holding’s €640.0 million ($882.5 million) principal amount of 8.375% senior notes due 2020 (the UPC Holding 8.375% Senior Notes) and UPC Holding’s $400.0 million principal amount of 9.875% senior notes due 2018 (the UPC Holding 9.875% Senior Notes) as the “UPC Holding Senior Notes.” |
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The details of the UPC Holding Senior Notes as of December 31, 2013 are summarized in the following table: |
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| | | | Outstanding principal | | | | | | | | | | | | |
amount | | | | | | | | |
UPC Holding Senior Notes | | Maturity | | Borrowing | | U.S. $ | | Estimated | | Carrying | | | | | | | | |
currency | equivalent | fair value | value (a) | | | | | | | | |
| | | | | in millions | | | | | | | | |
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UPC Holding 9.875% Senior Notes | 15-Apr-18 | | $ | 400 | | | $ | 400 | | | $ | 434 | | | $ | 381.7 | | | | | | | | | |
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UPC Holding 8.375% Senior Notes | 15-Aug-20 | | € | 640 | | | 882.5 | | | 975.2 | | | 882.5 | | | | | | | | | |
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UPC Holding 6.375% Senior Notes | September 15, 2022 | | € | 600 | | | 827.4 | | | 844.4 | | | 820.6 | | | | | | | | | |
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UPC Holding 6.75% Euro Senior Notes | March 15, 2023 | | € | 450 | | | 620.5 | | | 637.6 | | | 620.5 | | | | | | | | | |
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UPC Holding 6.75% CHF Senior Notes | March 15, 2023 | | CHF | 350 | | | 393.9 | | | 406.2 | | | 393.9 | | | | | | | | | |
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Total | | $ | 3,124.30 | | | $ | 3,297.40 | | | $ | 3,099.20 | | | | | | | | | |
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_______________ |
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(a) | Amounts include the impact of discounts, where applicable. | | | | | | | | | | | | | | | | | | | | | | | | | |
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Each issue of the UPC Holding Senior Notes are senior obligations that rank equally with all of the existing and future senior debt and are senior to all existing and future subordinated debt of UPC Holding. The UPC Holding Senior Notes are secured (on a shared basis) by pledges of the shares of UPC Holding. The UPC Holding Senior Notes contain certain customary incurrence-based covenants. For example, the ability to raise certain additional debt and make certain distributions or loans to other subsidiaries of Liberty Global is subject to a Consolidated Leverage Ratio test, as defined in the applicable indenture. In addition, the UPC Holding Senior Notes provide that any failure to pay principal prior to expiration of any applicable grace period, or any acceleration with respect to other indebtedness of €50.0 million ($68.9 million) or more in the aggregate of UPC Holding or its Restricted Subsidiaries (as defined in the applicable indenture), including UPC Broadband Holding, is an event of default under the UPC Holding Senior Notes. |
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At any time prior to April 15, 2014, in the case of the UPC Holding 9.875% Senior Notes, August 15, 2015, in the case of the UPC Holding 8.375% Senior Notes, September 15, 2017, in the case of the UPC Holding 6.375% Senior Notes, and March 15, 2018, in the case of the UPC Holding 6.75% Senior Notes, UPC Holding may redeem some or all of such UPC Holding Senior Notes by paying a “make-whole” premium, which is the present value of all scheduled interest payments until April 15, 2014, August 15, 2015, September 15, 2017 or March 15, 2018, as the case may be, using the discount rate (as specified in the applicable indenture) as of the redemption date, plus 50 basis points. |
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UPC Holding may redeem some or all of the UPC Holding Senior Notes at the following redemption prices (expressed as a percentage of the principal amount) plus accrued and unpaid interest and Additional Amounts (as defined in the applicable indenture), if any, to the applicable redemption date, if redeemed during the twelve-month period commencing on April 15, in the case of the UPC Holding 9.875% Senior Notes, August 15, in the case of the UPC Holding 8.375% Senior Notes, September 15, in the case of the UPC Holding 6.375% Senior Notes, and March 15, in the case of the UPC Holding 6.75% Senior Notes, of the years set forth below: |
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| | Redemption price | | | | | | | | | | | | | | | | | | |
Year | | UPC Holding 9.875% | | UPC Holding 8.375% | | UPC Holding 6.375% | | UPC Holding 6.75% Senior Notes | | | | | | | | | | | | | | | | | | |
Senior Notes | Senior Notes | Senior Notes | | | | | | | | | | | | | | | | | | |
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2014 | 104.94% | | N.A. | | N.A. | | N.A. | | | | | | | | | | | | | | | | | | |
2015 | 102.47% | | 104.19% | | N.A. | | N.A. | | | | | | | | | | | | | | | | | | |
2016 | 100.00% | | 102.79% | | N.A. | | N.A. | | | | | | | | | | | | | | | | | | |
2017 | 100.00% | | 101.40% | | 103.19% | | N.A. | | | | | | | | | | | | | | | | | | |
2018 | 100.00% | | 100.00% | | 102.13% | | 103.38% | | | | | | | | | | | | | | | | | | |
2019 | N.A. | | 100.00% | | 101.06% | | 102.25% | | | | | | | | | | | | | | | | | | |
2020 | N.A. | | 100.00% | | 100.00% | | 101.13% | | | | | | | | | | | | | | | | | | |
2021 and thereafter | N.A. | | N.A. | | 100.00% | | 100.00% | | | | | | | | | | | | | | | | | | |
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If all or substantially all of the assets of UPC Holding and certain of its subsidiaries are disposed of or any other Change of Control (as defined in the relevant UPC Holding Senior Notes) is triggered, UPC Holding must offer to repurchase all of the relevant UPC Holding Senior Notes at a redemption price of 101% of the principal amount of such UPC Holding Senior Notes. |
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UPCB SPE Notes |
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UPCB Finance Limited (UPCB Finance I), UPCB Finance II Limited (UPCB Finance II), UPCB Finance III Limited (UPCB Finance III), UPCB Finance V Limited (UPCB Finance V) and UPCB Finance VI Limited (UPCB Finance VI and, together with UPCB Finance I, UPCB Finance II, UPCB Finance III and UPCB Finance V, the UPCB SPEs) are all special purpose financing entities that are owned 100% by charitable trusts. The UPCB SPEs were created for the primary purposes of facilitating the offerings of €500.0 million ($689.5 million) principal amount of 7.625% senior secured notes (the UPCB Finance I Notes), €750.0 million ($1,034.2 million) principal amount of 6.375% senior secured notes (the UPCB Finance II Notes), $1.0 billion principal amount of 6.625% senior secured notes (the UPCB Finance III Notes), $750.0 million principal amount of 7.25% senior secured notes (the UPCB Finance V Notes) and $750.0 million principal amount of 6.875% senior secured notes (the UPCB Finance VI Notes and, together with the UPCB Finance I Notes, the UPCB Finance II Notes, the UPCB Finance III Notes and the UPCB Finance V Notes, the UPCB SPE Notes), respectively. The UPCB Finance I Notes, the UPCB Finance II Notes, the UPCB Finance III Notes, the UPCB Finance V Notes and the UPCB Finance VI Notes were issued on January 20, 2010, January 31, 2011, February 16, 2011, November 16, 2011 and February 7, 2012, respectively. |
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The UPCB Finance I Notes were issued at an original issue discount of 0.862%, resulting in cash proceeds before commissions and fees of €495.7 million ($699.7 million at the transaction date). The UPCB Finance II Notes, UPCB Finance III Notes, UPCB Finance V Notes and UPCB Finance VI Notes were each issued at par. UPCB Finance I, UPCB Finance II, UPCB Finance III, UPCB Finance V and UPCB Finance VI used the proceeds from the (i) UPCB Finance I Notes and available cash, (ii) UPCB Finance II Notes, (iii) UPCB Finance III Notes, (iv) UPCB Finance V Notes and (v) UPCB Finance VI Notes to fund new additional Facilities V, Y, Z, AC and AD, respectively, (each, a UPCB SPE Funded Facility) under the UPC Broadband Holding Bank Facility, with UPC Financing Partnership (UPC Financing) as the borrower. The proceeds from Facility V, Y, Z, AC and AD generally were used to repay amounts outstanding under the UPC Broadband Holding Bank Facility. |
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Each UPCB SPE is dependent on payments from UPC Financing under the applicable UPCB SPE Funded Facility in order to service its payment obligations under each respective UPCB SPE Note. Although UPC Financing has no equity or voting interest in any of the UPCB SPEs, each of the UPCB SPE Funded Facility loans creates a variable interest in the respective UPCB SPE for which UPC Financing is the primary beneficiary, as contemplated by GAAP. As such, UPC Financing and its parent entities, including UPC Holding and Liberty Global, are required by the provisions of GAAP to consolidate the UPCB SPEs. As a result, the amounts outstanding under Facilities V, Y, Z, AC and AD are eliminated in Liberty Global’s consolidated financial statements. |
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Pursuant to the respective indentures for the UPCB SPE Notes (the UPCB SPE Indentures) and the respective accession agreements for the Funded Facilities, the call provisions, maturity and applicable interest rate for each UPCB SPE Funded Facility are the same as those of the related UPCB SPE Notes. The UPCB SPEs, as lenders under the UPC Broadband Holding Bank Facility, are treated the same as the other lenders under the UPC Broadband Holding Bank Facility, with benefits, rights and protections similar to those afforded to the other lenders. Through the covenants in the applicable UPCB SPE Indenture and the applicable security interests over (i) all of the issued shares of the relevant UPCB SPE and (ii) the relevant UPCB SPE’s rights under the applicable UPCB SPE Funded Facility granted to secure the relevant UPCB SPE’s obligations under the relevant UPCB SPE Notes, the holders of the UPCB SPE Notes are provided indirectly with the benefits, rights, protections and covenants granted to the UPCB SPEs as lenders under the UPC Broadband Holding Bank Facility. |
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The UPCB SPEs are prohibited from incurring any additional indebtedness, subject to certain exceptions under the UPCB SPE Indentures. |
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The details of the UPCB SPE Notes as of December 31, 2013 are summarized in the following table: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Outstanding principal | | | | | | | | | | |
amount | | | | | | |
UPCB SPEs | | Maturity | | Interest rate | | Borrowing | | U.S. $ | | Estimated | | Carrying | | | | | | |
currency | equivalent | fair value | value (a) | | | | | | |
| | | | | | in millions | | | | | | |
| | | | | | | | | | | | | | | | | | |
UPCB Finance I Notes | January 15, 2020 | | 7.63% | | € | 500 | | | $ | 689.5 | | | $ | 747.2 | | | $ | 685.3 | | | | | | | |
| | | | | |
UPCB Finance II Notes | July 1, 2020 | | 6.38% | | € | 750 | | | 1,034.20 | | | 1,111.10 | | | 1,034.20 | | | | | | | |
| | | | | |
UPCB Finance III Notes | July 1, 2020 | | 6.63% | | $ | 1,000.00 | | | 1,000.00 | | | 1,063.80 | | | 1,000.00 | | | | | | | |
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UPCB Finance V Notes | November 15, 2021 | | 7.25% | | $ | 750 | | | 750 | | | 816.1 | | | 750 | | | | | | | |
| | | | | |
UPCB Finance VI Notes | January 15, 2022 | | 6.88% | | $ | 750 | | | 750 | | | 798.3 | | | 750 | | | | | | | |
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Total | | $ | 4,223.70 | | | $ | 4,536.50 | | | $ | 4,219.50 | | | | | | | |
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(a) | Amounts include the impact of discounts, where applicable. | | | | | | | | | | | | | | | | | | | | | | | | | |
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Subject to the circumstances described below, the UPCB Finance I Notes are non-callable until January 15, 2015, the UPCB Finance II Notes and the UPCB Finance III Notes are non-callable until July 1, 2015, the UPCB Finance V Notes are non-callable until November 15, 2016 and the UPCB Finance VI Notes are non-callable until January 15, 2017 (each a UPCB SPE Notes Call Date). If, however, at any time prior to the applicable UPCB SPE Notes Call Date, all or a portion of the loans under the related UPCB SPE Funded Facility are voluntarily prepaid (an Early Redemption Event), then the applicable UPCB SPE will be required to redeem an aggregate principal amount of its UPCB SPE Notes equal to the aggregate principal amount of loans so prepaid under the related UPCB SPE Funded Facility. In general, the redemption price payable will equal the sum of (i) 100% of the principal amount of the applicable UPCB SPE Notes to be redeemed, (ii) the excess of (a) the present value at such redemption date of (1) the redemption price of such UPCB SPE Notes on the applicable UPCB SPE Notes Call Date, as determined in accordance with the table below, plus (2) all required remaining scheduled interest payments thereon due through the applicable UPCB SPE Notes Call Date (excluding accrued and unpaid interest to such redemption date), computed using the discount rate specified in the applicable UPCB SPE Indenture, over (b) the principal amount of such UPCB SPE Notes to be redeemed and (iii) accrued but unpaid interest thereon and Additional Amounts (as defined in the applicable UPCB SPE Indenture), if any, to the applicable redemption date (the Make-Whole Redemption Price). However, in the case of an Early Redemption Event with respect to Facility Z, AC or AD occurring prior to the applicable UPCB SPE Notes Call Date, the redemption price payable upon redemption of an aggregate principal amount of the relevant UPCB SPE Notes not exceeding 10% of the original aggregate principal amount of such UPCB SPE Notes during each twelve-month period commencing on February 16, 2011, in the case of Facility Z, November 16, 2011, in the case of Facility AC, or February 7, 2012, in the case of Facility AD, will equal 103% of the principal amount of the relevant UPCB SPE Notes redeemed plus accrued and unpaid interest thereon and Additional Amounts, if any, to the applicable redemption date. The redemption price payable for any principal amount of such UPCB SPE Notes redeemed in excess of the 10% limitation will be the Make-Whole Redemption Price. |
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Upon the occurrence of an Early Redemption Event on or after the applicable UPCB SPE Notes Call Date, the applicable UPCB SPE will redeem an aggregate principal amount of its UPCB SPE Notes equal to the principal amount of the related UPCB SPE Funded Facility prepaid at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest and Additional Amounts, if any, to the applicable redemption date, if redeemed during the twelve-month period commencing on January 15, in the case of the UPCB Finance I Notes and the UPCB Finance VI Notes, July 1, in the case of the UPCB Finance II Notes and the UPCB Finance III Notes, and November 15, in the case of the UPCB Finance V Notes, of the years set forth below: |
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| | Redemption Price | | | | | | | | | | | | | | | | |
Year | | UPCB Finance I Notes | | UPCB Finance II Notes | | UPCB Finance III Notes | | UPCB Finance V Notes | | UPCB Finance VI Notes | | | | | | | | | | | | | | | | |
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2015 | 103.81% | | 103.19% | | 103.31% | | N.A. | | N.A. | | | | | | | | | | | | | | | | |
2016 | 102.54% | | 102.13% | | 102.21% | | 103.62% | | N.A. | | | | | | | | | | | | | | | | |
2017 | 101.27% | | 101.06% | | 101.10% | | 102.42% | | 103.44% | | | | | | | | | | | | | | | | |
2018 | 100.00% | | 100.00% | | 100.00% | | 101.21% | | 102.29% | | | | | | | | | | | | | | | | |
2019 | 100.00% | | 100.00% | | 100.00% | | 100.00% | | 101.15% | | | | | | | | | | | | | | | | |
2020 | 100.00% | | 100.00% | | 100.00% | | 100.00% | | 100.00% | | | | | | | | | | | | | | | | |
2021 and thereafter | N.A. | | N.A. | | N.A. | | 100.00% | | 100.00% | | | | | | | | | | | | | | | | |
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Unitymedia KabelBW Notes and KBW Notes |
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Unitymedia KabelBW Exchange, Special Optional Redemptions and KBW Fold-in. Prior to the exchange and redemption transactions described below, the KBW Notes consisted of (i) UPC Germany HC1’s €680.0 million ($937.7 million) principal amount of 9.5% senior notes due 2021 (the KBW Senior Notes) and (ii) KBW’s (a) €800.0 million ($1,103.1 million) principal amount of 7.5% senior secured notes due 2019 (the KBW Euro Senior Secured Notes), (b) $500.0 million principal amount of 7.5% senior secured notes due 2019 (the KBW Dollar Senior Secured Notes and together with the KBW Euro Senior Secured Notes, the KBW Senior Secured Fixed-Rate Notes) and (c) €420.0 million ($579.2 million) principal amount of senior secured floating-rate notes due 2018 (the KBW Senior Secured Floating-Rate Notes and together with the KBW Senior Secured Fixed-Rate Notes, the KBW Senior Secured Notes). |
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In May 2012, Unitymedia KabelBW and certain of its subsidiaries completed (i) the exchange (the Unitymedia KabelBW Exchange) of (a) 90.9% of the outstanding principal amount of the KBW Senior Notes for an equal amount of UM Senior Exchange Notes (as defined and described below) and (b) 92.5% of the outstanding principal amount of the KBW Senior Secured Notes for an equal amount of UM Senior Secured Exchange Notes (as defined and described below), (ii) the redemption (the Special Optional Redemptions) of the remaining KBW Notes that were not exchanged pursuant to the Unitymedia KabelBW Exchange and (iii) a series of mergers and consolidations, pursuant to which an indirect parent company of KBW became a subsidiary of Unitymedia Hessen (the KBW Fold-in). The redemption price with respect to the Special Optional Redemptions was 101% of the applicable principal amount thereof, and such redemptions were initially funded with borrowings under the Unitymedia KabelBW Revolving Credit Facilities, as defined and described below. In connection with these transactions, we recognized aggregate losses on debt modification and extinguishment of $7.0 million during 2012, including (i) $5.6 million of third-party costs and (ii) a loss of $1.4 million representing the difference between the carrying value and redemption price of the debt redeemed pursuant to the Special Optional Redemptions. |
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The details of (i) the Unitymedia KabelBW Exchange and (ii) the Special Optional Redemptions are as follows: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Outstanding principal amount prior to the Unitymedia KabelBW Exchange | | Principal amount exchanged pursuant to the Unitymedia KabelBW Exchange | | Principal amount redeemed pursuant to the Special Optional Redemptions | |
KBW Notes | | | Borrowing currency | | U.S. $ equivalent (a) | | Borrowing currency | | U.S. $ equivalent (a) | | Borrowing currency | | U.S. $ equivalent (a) | |
| | | in millions | |
| | | | | | | | | | | | | | |
KBW Senior Notes (b) | | € | 680 | | | $ | 890 | | | € | 618 | | | $ | 808.8 | | | € | 62 | | | $ | 81.2 | | |
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KBW Euro Senior Secured Notes (c) | | € | 800 | | | 1,047.00 | | | € | 735.1 | | | 962.1 | | | € | 64.9 | | | 84.9 | | |
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KBW Dollar Senior Secured Notes (d) | | $ | 500 | | | 500 | | | $ | 459.3 | | | 459.3 | | | $ | 40.7 | | | 40.7 | | |
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KBW Senior Secured Floating-Rate Notes (e) | | € | 420 | | | 549.7 | | | € | 395.9 | | | 518.2 | | | € | 24.1 | | | 31.5 | | |
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Total | | | | $ | 2,986.70 | | | | | $ | 2,748.40 | | | | | $ | 238.3 | | |
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(a) | Translations are calculated as of the May 4, 2012 transaction date. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(b) | The KBW Senior Notes tendered for exchange were exchanged for an equal principal amount of 9.5% senior notes issued by Unitymedia KabelBW due March 15, 2021 (the UM Senior Exchange Notes). | | | | | | | | | | | | | | | | | | | | | | | | | |
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(c) | The KBW Euro Senior Secured Notes tendered for exchange were exchanged for an equal principal amount of 7.5% senior secured notes issued by Unitymedia Hessen and Unitymedia NRW GmbH (Unitymedia NRW) (each a subsidiary of Unitymedia KabelBW and together, the UM Senior Secured Notes Issuers) due March 15, 2019 (the UM Euro Senior Secured Exchange Notes). | | | | | | | | | | | | | | | | | | | | | | | | | |
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(d) | The KBW Dollar Senior Secured Notes tendered for exchange were exchanged for an equal principal amount of 7.5% senior secured notes issued by the UM Senior Secured Notes Issuers due March 15, 2019 (the UM Dollar Senior Secured Exchange Notes and, together with the UM Euro Senior Secured Exchange Notes, the UM Senior Secured Fixed-Rate Exchange Notes). | | | | | | | | | | | | | | | | | | | | | | | | | |
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(e) | The KBW Senior Secured Floating-Rate Notes tendered for exchange were exchanged for an equal principal amount of senior secured floating-rate notes issued by the UM Senior Secured Notes Issuers due March 15, 2018 (the UM Senior Secured Floating-Rate Exchange Notes and, together with the UM Senior Secured Fixed-Rate Exchange Notes, the UM Senior Secured Exchange Notes). The UM Senior Secured Floating-Rate Exchange Notes, prior to their redemption as described below, bore interest at a rate of EURIBOR plus 4.25%. We refer to the UM Senior Exchange Notes and the UM Senior Secured Exchange Notes collectively as the “UM Exchange Notes.” | | | | | | | | | | | | | | | | | | | | | | | | | |
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November 2013 UM Senior Secured Notes. On November 21, 2013, the UM Senior Secured Notes Issuers issued €475.0 million ($655.0 million) principal amount of 6.25% senior secured notes due January 15, 2029 (the November 2013 UM Senior Secured Notes). A portion of the net proceeds from the issuance of the November 2013 UM Senior Secured Notes were used to redeem all of the then outstanding 2009 UM Euro Senior Secured Notes (as defined and described below), including the related redemption premiums. |
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April 2013 UM Senior Secured Notes. On April 16, 2013, UM Senior Secured Notes Issuers issued €350.0 million ($482.6 million) principal amount of 5.625% senior secured notes due April 15, 2023 (the April 2013 UM Senior Secured Notes). |
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January 2013 UM Senior Secured Notes. On January 21, 2013, the UM Senior Secured Notes Issuers issued €500.0 million ($689.5 million) principal amount of 5.125% senior secured notes due January 21, 2023 (the January 2013 UM Senior Secured Notes). The net proceeds from the issuance of the January 2013 UM Senior Secured Notes were used to redeem a portion of the 2009 UM Euro Senior Secured Notes, as defined below. |
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December 2012 UM Senior Secured Notes. On December 14, 2012, the UM Senior Secured Notes Issuers issued $1.0 billion principal amount of 5.5% senior secured notes due January 15, 2023 (the December 2012 UM Dollar Senior Secured Notes) and €500.0 million ($689.5 million) principal amount of 5.75% senior secured notes due January 15, 2023 (the December 2012 UM Euro Senior Secured Notes, and together with the December 2012 UM Dollar Senior Secured Notes, the December 2012 UM Senior Secured Notes), each at par. The net proceeds from the issuance of the December 2012 UM Senior Secured Notes were used to purchase and redeem (i) all of the 2009 UM Dollar Senior Secured Notes (as defined and described below) and (ii) €524.0 million ($722.6 million) of the 2009 UM Euro Senior Secured Notes (as defined and described below). During the fourth quarter of 2012, we recognized losses on debt extinguishment of $175.8 million including a loss of (i) $125.9 million representing the difference between the principal and redemption price of the debt redeemed and (ii) $49.4 million associated with the write-off of deferred financing costs and an unamortized discount. |
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September 2012 UM Senior Secured Notes. On September 19, 2012, the UM Senior Secured Notes Issuers issued €650.0 million ($896.3 million) principal amount of 5.5% senior secured notes due September 15, 2022 (the September 2012 UM Senior Secured Notes). The net proceeds from the issuance of the September 2012 UM Senior Secured Notes were used to redeem in full the UM Senior Secured Floating-Rate Exchange Notes at a redemption price of 101%, with the remaining €241.8 million ($333.4 million) available for general corporate purposes. During the third quarter of 2012, we recognized losses on debt extinguishment of $10.2 million representing the difference between the carrying value and redemption price of the debt redeemed. |
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2009 UM Notes. In November 2009, Unitymedia KabelBW issued (i) €1,430.0 million ($1,971.9 million) principal amount of 8.125% senior secured notes (the 2009 UM Euro Senior Secured Notes) at an issue price of 97.844%, (ii) $845.0 million principal amount of 8.125% senior secured notes (the 2009 UM Dollar Senior Secured Notes and, together with the 2009 UM Euro Senior Secured Notes, the 2009 UM Senior Secured Notes) at an issue price of 97.844% and (iii) €665.0 million ($917.0 million) principal amount of 9.625% senior notes (the 2009 UM Senior Notes and together with the 2009 UM Senior Secured Notes, the 2009 UM Notes) at an issue price of 97.652%. |
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We refer to the 2009 UM Notes, the UM Exchange Notes, the September 2012 UM Senior Secured Notes and the December 2012 UM Senior Secured Notes, collectively as the “Unitymedia KabelBW Notes.” |
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The details of the Unitymedia KabelBW Notes as of December 31, 2013 are summarized in the following table: |
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| | | | | | Outstanding principal | | | | | | | | | | |
amount | | | | | | |
Unitymedia KabelBW Notes | | Maturity | | Interest | | Borrowing | | U.S. $ | | Estimated | | Carrying | | | | | | |
rate | currency | equivalent | fair value | value (a) | | | | | | |
| | | | | | in millions | | | | | | |
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2009 UM Senior Notes | December 1, 2019 | | 9.63% | | € | 665 | | | $ | 917 | | | $ | 1,018.40 | | | $ | 901.7 | | | | | | | |
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UM Senior Exchange Notes | March 15, 2021 | | 9.50% | | € | 618 | | | 852.2 | | | 992.2 | | | 850.1 | | | | | | | |
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UM Euro Senior Secured Exchange Notes | March 15, 2019 | | 7.50% | | € | 735.1 | | | 1,013.70 | | | 1,104.80 | | | 1,020.70 | | | | | | | |
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UM Dollar Senior Secured Exchange Notes | March 15, 2019 | | 7.50% | | $ | 459.3 | | | 459.3 | | | 498.9 | | | 466.5 | | | | | | | |
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September 2012 UM Senior Secured Notes | September 15, 2022 | | 5.50% | | € | 650 | | | 896.3 | | | 926 | | | 896.3 | | | | | | | |
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December 2012 UM Dollar Senior Secured Notes | January 15, 2023 | | 5.50% | | $ | 1,000.00 | | | 1,000.00 | | | 975 | | | 1,000.00 | | | | | | | |
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December 2012 UM Euro Senior Secured Notes | January 15, 2023 | | 5.75% | | € | 500 | | | 689.5 | | | 713.6 | | | 689.5 | | | | | | | |
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January 2013 UM Senior Secured Notes | January 21, 2023 | | 5.13% | | € | 500 | | | 689.5 | | | 690.3 | | | 689.5 | | | | | | | |
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April 2013 UM Senior Secured Notes | April 15, 2023 | | 5.63% | | € | 350 | | | 482.6 | | | 490.2 | | | 482.6 | | | | | | | |
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November 2013 UM Senior Secured Notes | January 15, 2029 | | 6.25% | | € | 475 | | | 655 | | | 648.8 | | | 655 | | | | | | | |
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Total | | $ | 7,655.10 | | | $ | 8,058.20 | | | $ | 7,651.90 | | | | | | | |
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_______________ |
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(a) | Amounts include the impact of premiums and discounts, where applicable. | | | | | | | | | | | | | | | | | | | | | | | | | |
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The 2009 UM Senior Notes and the UM Senior Exchange Notes are senior obligations of Unitymedia KabelBW that rank equally with all of the existing and future senior debt of Unitymedia KabelBW and are senior to all existing and future subordinated debt of Unitymedia KabelBW. The 2009 UM Senior Notes and the UM Senior Exchange Notes are secured by a first-ranking pledge over the shares of Unitymedia KabelBW and junior-priority share pledges and other asset security of certain subsidiaries of Unitymedia KabelBW. |
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The 2009 UM Senior Secured Notes, the UM Senior Secured Exchange Notes, the September 2012 UM Senior Secured Notes, the December 2012 UM Senior Secured Notes, January 2013 UM Senior Secured Notes, the April 2013 UM Senior Secured Notes and the November 2013 UM Senior Secured Notes are (i) senior obligations of the UM Senior Secured Notes Issuers that rank equally with all of the existing and future senior debt of each UM Senior Secured Notes Issuer and are senior to all existing and future subordinated debt of each of the UM Senior Secured Notes Issuers and (ii) are secured by a first-ranking pledge over the shares of Unitymedia KabelBW and the UM Senior Secured Notes Issuers and certain other share and/or asset security of Unitymedia KabelBW and certain of its subsidiaries. |
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The Unitymedia KabelBW Notes contain certain customary incurrence-based covenants. For example, the ability to raise certain additional debt and make certain distributions or loans to other subsidiaries of Liberty Global is subject to a Consolidated Leverage Ratio test, as defined in the applicable indenture. The Unitymedia KabelBW Notes provide that any failure to pay principal prior to expiration of any applicable grace period, or any acceleration with respect to other indebtedness of €25.0 million ($34.5 million) or more in the aggregate of Unitymedia KabelBW or a UM Senior Secured Notes Issuer or any of the Restricted Subsidiaries (as defined in the applicable indenture) is an event of default under the Unitymedia KabelBW Notes. |
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Subject to the circumstances described below, the 2009 UM Senior Notes are non-callable until December 1, 2014, the UM Senior Exchange Notes are non-callable until March 15, 2016, the UM Senior Secured Fixed-Rate Exchange Notes are non-callable until March 15, 2015, the September 2012 UM Senior Secured Notes are non-callable until September 15, 2017, the December 2012 UM Senior Secured Notes are non-callable until January 15, 2018, the January 2013 UM Senior Secured Notes are non-callable until January 21, 2018, the April 2013 UM Senior Secured Notes are non-callable until April 15, 2018 and the November 2013 UM Senior Secured Notes are non-callable until January 15, 2021. |
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At any time prior to December 1, 2014, in the case of the 2009 UM Senior Notes, March 15, 2016, in the case of the UM Senior Exchange Notes, March 15, 2015, in the case of the UM Senior Secured Fixed-Rate Exchange Notes, September 15, 2017, in the case of the September 2012 UM Senior Secured Notes, January 15, 2018, in the case of the December 2012 UM Senior Secured Notes, January 21, 2018, in the case of the January 2013 UM Senior Secured Notes, April 15, 2018, in the case of the April 2013 UM Senior Secured Notes, and January 15, 2021, in the case of the November 2013 UM Senior Secured Notes, Unitymedia KabelBW and the UM Senior Secured Notes Issuers (as applicable) may redeem some or all of these Unitymedia KabelBW Notes (as applicable) by paying a “make-whole” premium, which is the present value of all remaining scheduled interest payments to the redemption date using the discount rate (as specified in the applicable indenture) as of the redemption date plus 50 basis points. |
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Unitymedia KabelBW and the UM Senior Secured Notes Issuers (as applicable) may redeem some or all of the Unitymedia KabelBW Notes at the following redemption prices (expressed as a percentage of the principal amount) plus accrued and unpaid interest and Additional Amounts (as defined in the applicable indenture), if any, to the applicable redemption date, if redeemed during the twelve-month period commencing on December 1, in the case of the 2009 UM Senior Notes and the 2009 UM Senior Secured Notes, March 15, in the case of the UM Senior Exchange Notes and the UM Senior Secured Fixed-Rate Exchange Notes, September 15, in the case of the September 2012 UM Senior Secured Notes, January 15, in the case of the December 2012 UM Senior Secured Notes and the November 2013 UM Senior Secured Notes, January 21, in the case of the January 2013 UM Senior Secured Notes, or April 15, in the case of the April 2013 UM Senior Secured Notes, of the years set forth below: |
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| | Redemption Price | | | | | | | | |
Year | | 2009 | | UM Senior Exchange Notes | | UM Senior Secured Fixed- Rate Exchange Notes | | Sep-12 | | Dec-12 | | Dec-12 | | January 2013 UM Senior Secured Notes | | April 2013 UM Senior Secured Notes | | November 2013 UM Senior Secured Notes | | | | | | | | |
UM | UM Senior Secured Notes | UM Dollar Senior Secured Notes | UM Euro Senior Secured Notes | | | | | | | | |
Senior Notes | | | | | | | | | | | |
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2014 | 104.81% | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | | | | | | | |
2015 | 103.21% | | N.A. | | 103.75% | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | | | | | | | |
2016 | 101.60% | | 104.75% | | 101.88% | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | | | | | | | |
2017 | 100.00% | | 103.17% | | 100.00% | | 102.75% | | N.A. | | N.A. | | N.A. | | N.A. | | N.A. | | | | | | | | |
2018 | 100.00% | | 101.58% | | 100.00% | | 101.83% | | 102.75% | | 102.88% | | 102.56% | | 102.81% | | N.A. | | | | | | | | |
2019 | 100.00% | | 100.00% | | 100.00% | | 100.92% | | 101.83% | | 101.92% | | 101.71% | | 101.88% | | N.A. | | | | | | | | |
2020 | N.A. | | 100.00% | | N.A. | | 100.00% | | 100.92% | | 100.96% | | 100.85% | | 100.94% | | N.A. | | | | | | | | |
2021 and thereafter | N.A. | | 100.00% | | N.A. | | 100.00% | | 100.00% | | 100.00% | | 100.00% | | 100.00% | | 100.00% | | | | | | | | |
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In addition, prior to the dates below, the UM Senior Secured Notes Issuers may redeem up to 40% of the respective notes presented below at the following redemption prices: |
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Unitymedia KabelBW Notes | | Redemption date | | Redemption price | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
November 2013 UM Senior Secured Notes | 15-Jan-17 | | 106.25% | | | | | | | | | | | | | | | | | | | | | | |
December 2012 UM Euro Senior Secured Notes | 15-Jan-16 | | 105.75% | | | | | | | | | | | | | | | | | | | | | | |
April 2013 UM Senior Secured Notes | 15-Apr-16 | | 105.62% | | | | | | | | | | | | | | | | | | | | | | |
September 2012 UM Senior Secured Notes | 15-Sep-15 | | 105.50% | | | | | | | | | | | | | | | | | | | | | | |
December 2012 UM Dollar Senior Secured Notes | 15-Jan-16 | | 105.50% | | | | | | | | | | | | | | | | | | | | | | |
January 2013 UM Senior Secured Notes | 21-Jan-16 | | 105.25% | | | | | | | | | | | | | | | | | | | | | | |
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KBW and its immediate parent (collectively, the New UM Guarantors) have granted, in addition to guarantees provided by Unitymedia KabelBW and/or certain of its subsidiaries, as applicable, of the 2009 UM Senior Notes and the 2009 UM Senior Secured Notes, a senior guarantee of the 2009 UM Senior Secured Notes, the January 2013 UM Senior Secured Notes, the April 2013 UM Senior Secured Notes and the November 2013 UM Senior Secured Notes and a senior subordinated guarantee of the 2009 UM Senior Notes. The New UM Guarantors have also granted a senior subordinated guarantee of the UM Senior Exchange Notes and a senior guarantee of the UM Senior Secured Exchange Notes, the September 2012 UM Senior Secured Notes and the December 2012 UM Senior Secured Notes. In addition, the New UM Guarantors have provided certain share and asset security in favor of the 2009 UM Senior Secured Notes, the UM Senior Secured Exchange Notes, the September 2012 UM Senior Secured Notes, the December 2012 UM Senior Secured Notes, the January 2013 UM Senior Secured Notes, the April 2013 UM Senior Secured Notes and the November 2013 UM Senior Secured Notes. |
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If all or substantially all of the assets of (i) Unitymedia KabelBW and certain of its subsidiaries or (ii) the UM Senior Secured Notes Issuer and certain of their subsidiaries are disposed of or any other Change of Control (as defined in the relevant Unitymedia KabelBW Notes) is triggered, Unitymedia KabelBW and the UM Senior Secured Notes Issuers (as applicable) must offer to repurchase all of the relevant Unitymedia KabelBW Notes at a redemption price of 101% of the principal amount of such Unitymedia KabelBW Notes. |
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Unitymedia KabelBW Revolving Credit Facilities |
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On May 1, 2012, Unitymedia Hessen entered into a €312.5 million ($430.9 million) secured revolving credit facility agreement with certain lenders (the New Unitymedia KabelBW Revolving Credit Facility). On August 28, 2012, the New Unitymedia KabelBW Revolving Credit Facility was increased to €337.5 million ($465.4 million). The interest rate for the New Unitymedia KabelBW Revolving Credit Facility is EURIBOR plus a margin of 3.25%. Borrowings under the New Unitymedia KabelBW Revolving Credit Facility mature on June 30, 2017. The New Unitymedia KabelBW Revolving Credit Facility provides for an annual commitment fee of 1.25% on the unused portion. Also on May 1, 2012, Unitymedia KabelBW’s existing €80.0 million ($110.3 million) secured revolving credit facility (the Unitymedia KabelBW Revolving Credit Facility, and together with the New Unitymedia KabelBW Revolving Credit Facility, the Unitymedia KabelBW Revolving Credit Facilities) was amended whereby the maturity date was extended to June 30, 2017 and the interest rate was reduced to EURIBOR plus a margin of 2.50%. The Unitymedia KabelBW Revolving Credit Facility is senior to (i) the 2009 UM Notes, (ii) the UM Exchange Notes, (iii) the September 2012 UM Senior Secured Notes, (iv) the December 2012 UM Senior Secured Notes, (v) the January 2013 UM Senior Secured Notes, (vi) the April 2013 UM Senior Secured Notes, (vii) the November 2013 UM Senior Secured Notes and (viii) the New Unitymedia KabelBW Revolving Credit Facility. The Unitymedia KabelBW Revolving Credit Facility provides for an annual commitment fee of 1.00% on the unused portion. The Unitymedia KabelBW Revolving Credit Facilities may be used for general corporate and working capital purposes. |
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In addition to customary restrictive covenants and events of default, the Unitymedia KabelBW Revolving Credit Facilities require compliance with a Consolidated Leverage Ratio, as defined in the applicable facility. The Unitymedia KabelBW Revolving Credit Facilities are secured by a pledge over the shares of the borrower and certain other asset security of certain subsidiaries of Unitymedia KabelBW. The Unitymedia KabelBW Revolving Credit Facilities permit Unitymedia KabelBW to transfer funds to its parent company (and indirectly to Liberty Global) through loans, dividends or other distributions provided that Unitymedia KabelBW maintains compliance with applicable covenants. If a Change of Control occurs, as defined in the Unitymedia KabelBW Revolving Credit Facilities, each lender may cancel its commitments and declare all outstanding amounts immediately due and payable. |
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Telenet Credit Facility |
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The Telenet Credit Facility, as amended, is the senior secured credit facility of Telenet NV and Telenet International. In addition to customary restrictive covenants, prepayment requirements and events of default, including defaults on other indebtedness of Telenet and its subsidiaries, the Telenet Credit Facility requires compliance with a Net Total Debt to Consolidated Annualized EBITDA covenant and a Consolidated EBITDA to Total Cash Interest covenant, each capitalized term as defined in the Telenet Credit Facility. Under the Telenet Credit Facility, members of the borrower group are permitted to make certain distributions and restricted payments to its shareholders subject to compliance with applicable covenants. The Telenet Credit Facility is secured by (i) pledges over the shares of Telenet NV and certain of its subsidiaries, (ii) pledges over certain intercompany and subordinated shareholder loans and (iii) pledges over certain receivables, real estate and other assets of Telenet NV, Telenet International and certain other Telenet subsidiaries. The agreement governing the Telenet Credit Facility contains covenants that limit, among other things, Telenet’s ability to merge with or into another company, acquire other companies, incur additional debt, dispose of assets, make distributions or pay dividends, provide loans and guarantees and enter into hedging agreements. In addition to customary default provisions, including defaults on other indebtedness of Telenet and its subsidiaries, the Telenet Credit Facility provides that any event of default with respect to indebtedness of €50.0 million ($68.9 million) or more in the aggregate of Telenet and certain of its subsidiaries is an event of default under the Telenet Credit Facility. If a Change of Control occurs, as defined in the Telenet Credit Facility, the facility agent may (if required by the majority lenders) cancel the total commitments and declare all outstanding amounts immediately due and payable. |
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The details of our borrowings under the Telenet Credit Facility as of December 31, 2013 are summarized in the following table: |
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Facility | | Final maturity date | | Interest rate | | Facility amount | | Unused | | Carrying | | | | | | | | | | |
(in borrowing | borrowing | value | | | | | | | | | | |
currency) (a) | capacity (b) | | | | | | | | | | | |
| | | | | | in millions | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
M (c) | 15-Nov-20 | | 6.38% | | € | 500 | | | $ | — | | | $ | 689.5 | | | | | | | | | | | |
| | | | | | | | | |
N (c) | November 15, 2016 | | 5.30% | | € | 100 | | | — | | | 137.9 | | | | | | | | | | | |
| | | | | | | | | |
O (c) | 15-Feb-21 | | 6.63% | | € | 300 | | | — | | | 413.7 | | | | | | | | | | | |
| | | | | | | | | |
P (c) | June 15, 2021 | | EURIBOR + 3.875% | | € | 400 | | | — | | | 551.6 | | | | | | | | | | | |
| | | | | | | | | |
Q | July 31, 2017 | | EURIBOR + 3.25% | | € | 431 | | | — | | | 594.4 | | | | | | | | | | | |
| | | | | | | | | |
R | July 31, 2019 | | EURIBOR + 3.625% | | € | 798.6 | | | — | | | 1,101.20 | | | | | | | | | | | |
| | | | | | | | | |
S | December 31, 2016 | | EURIBOR + 2.75% | | € | 158 | | | 217.9 | | | — | | | | | | | | | | | |
| | | | | | | | | |
T | December 31, 2018 | | EURIBOR + 3.50% | | € | 175 | | | — | | | 241.3 | | | | | | | | | | | |
| | | | | | | | | |
U (c) | August 15, 2022 | | 6.25% | | € | 450 | | | — | | | 620.5 | | | | | | | | | | | |
| | | | | | | | | |
V (c) | August 15, 2024 | | 6.75% | | € | 250 | | | — | | | 344.7 | | | | | | | | | | | |
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Elimination of Telenet Facilities M, N, O, P, U and V in consolidation (c) | | — | | | (2,757.9 | ) | | | | | | | | | | |
| | | | | | | | | |
Total | | $ | 217.9 | | | $ | 1,936.90 | | | | | | | | | | | |
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_______________ |
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(a) | Except as described in (c) below, amounts represent total third-party facility amounts at December 31, 2013. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(b) | Telenet Facility S has a commitment fee on unused and uncanceled balances of 1.10% per year. | | | | | | | | | | | | | | | | | | | | | | | | | |
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(c) | As described below, the amounts outstanding under Telenet Facilities M, N, O, P, U and V are eliminated in Liberty Global’s consolidated financial statements. | | | | | | | | | | | | | | | | | | | | | | | | | |
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Refinancing Transactions. During 2012 and 2011, Telenet completed a number of refinancing transactions that generally resulted in additional borrowings or extended maturities under the Telenet Credit Facility. In connection with the 2011 transactions, Telenet recognized aggregate debt extinguishment losses of $14.8 million, representing (i) a $9.5 million write-off of deferred financing costs and (ii) the incurrence of $5.3 million of third-party costs. |
Telenet SPE Notes |
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Telenet Finance Luxembourg S.C.A. (Telenet Finance), Telenet Finance Luxembourg II S.A. (Telenet Finance II), Telenet Finance III Luxembourg S.C.A. (Telenet Finance III), Telenet Finance IV Luxembourg S.C.A. (Telenet Finance IV) and Telenet Finance V Luxembourg S.C.A. (Telenet Finance V and together with Telenet Finance, Telenet Finance II, Telenet Finance III and Telenet Finance IV, the Telenet SPEs) are all special purpose financing entities that are owned 100% by certain third parties. The Telenet SPEs were created for the primary purposes of facilitating the offerings of €500.0 million ($689.5 million) principal amount of 6.375% senior secured notes (the Telenet Finance Notes), €100.0 million ($137.9 million) principal amount of 5.3% senior secured notes (the Telenet Finance II Notes), €300.0 million ($413.7 million) principal amount of 6.625% senior secured notes (the Telenet Finance III Notes), €400.0 million ($551.6 million) principal amount of floating-rate senior secured notes (the Telenet Finance IV Notes), €450.0 million ($620.5 million) principal amount of 6.25% senior secured notes (the 6.25% Telenet Finance V Notes) and €250.0 million ($344.7 million) principal amount of 6.75% senior secured notes (the 6.75% Telenet Finance V Notes, and together with the 6.25% Telenet Finance V Notes, the Telenet Finance V Notes). We refer to the Telenet Finance Notes, the Telenet Finance II Notes, the Telenet Finance III Notes, the Telenet Finance IV Notes and the Telenet Finance V Notes collectively as the “Telenet SPE Notes.” |
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On November 3, 2010, November 26, 2010, February 15, 2011 and June 15, 2011, the applicable Telenet SPE issued the Telenet Finance Notes, the Telenet Finance II Notes, the Telenet Finance III Notes and the Telenet Finance IV Notes and on August 13, 2012, Telenet Finance V issued the 6.75% Telenet Finance V Notes and the 6.25% Telenet Finance V Notes, respectively. The proceeds from these Telenet SPE Notes were used to fund the respective new Facility M, N, O, P, U and V of the Telenet Credit Facility, the proceeds of which were in turn generally applied to repay amounts outstanding under the Telenet Credit Facility. |
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Each Telenet SPE is dependent on payments from Telenet International under the applicable facility (each, a Telenet SPE Funded Facility) of the Telenet Credit Facility in order to service its payment obligations under its Telenet SPE Notes. Although Telenet International has no equity or voting interest in any of the Telenet SPEs, each of the Telenet SPE Funded Facility loans creates a variable interest in the respective Telenet SPE for which Telenet International is the primary beneficiary, as contemplated by GAAP. As such, Telenet International and its parent entities, including Telenet and Liberty Global, are required by the provisions of GAAP to consolidate the Telenet SPEs. Accordingly, the amounts outstanding under Facilities M, N, O, P, U and V have been eliminated in Liberty Global’s consolidated financial statements. |
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Pursuant to the respective indentures for the Telenet SPE Notes (the Telenet SPE Indentures) and the respective accession agreements for the Telenet SPE Funded Facilities, the call provisions, maturity and applicable interest rate for each Telenet SPE Funded Facility are the same as those of the related Telenet SPE Notes. The Telenet SPEs, as lenders under the Telenet Credit Facility, are treated the same as the other lenders under the Telenet Credit Facility, with benefits, rights and protections similar to those afforded to the other lenders. Through the covenants in the applicable Telenet SPE Indenture and the applicable security interests over (i) all of the issued shares of the relevant Telenet SPE and (ii) the relevant Telenet SPE’s rights under the applicable Telenet SPE Funded Facility granted to secure the obligations of the relevant Telenet SPE under the relevant Telenet SPE Notes, the holders of the Telenet SPE Notes are provided indirectly with the benefits, rights, protections and covenants, granted to the Telenet SPEs as lenders under the Telenet Credit Facility. |
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The Telenet SPEs are prohibited from incurring any additional indebtedness, subject to certain exceptions, under the Telenet SPE Indentures. |
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Subject to the circumstances described below, the Telenet Finance Notes may not be redeemed prior to November 15, 2015, the Telenet Finance III Notes may not be redeemed prior to February 15, 2016, the Telenet Finance IV Notes may not be redeemed prior to June 15, 2014, the 6.25% Telenet Finance V Notes may not be redeemed prior to August 15, 2017 (except as described above) and the 6.75% Telenet Finance V Notes may not be redeemed prior to August 15, 2018 (each a Telenet SPE Notes Call Date). If, however, at any time prior to the applicable Telenet SPE Notes Call Date, a voluntary prepayment of all or a portion of the loans under the related Telenet SPE Funded Facility occurs, then the applicable Telenet SPE will be required to redeem an aggregate principal amount of its Telenet SPE Notes equal to the principal amount of the loans so prepaid under the related Telenet SPE Funded Facility. The redemption price payable will equal the sum of (i) 100% of the principal amount of the applicable Telenet SPE Notes to be redeemed, (ii) the excess of (a) the present value at such redemption date of (1) the redemption price of such Telenet SPE Notes on the applicable Telenet SPE Notes Call Date, as determined in accordance with the table below, plus (2) all required remaining scheduled interest payments thereon due through the applicable Telenet SPE Notes Call Date (excluding accrued and unpaid interest to such redemption date), computed using the discount rate specified in the applicable Telenet SPE Indenture, over (b) the principal amount of such Telenet SPE Notes to be redeemed and (iii) accrued and unpaid interest thereon and Additional Amounts (as defined in the applicable Telenet SPE Indenture), if any, to the applicable redemption date. |
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On or after (i) the applicable Telenet SPE Notes Call Date, upon the voluntary prepayment of all or a portion of the loans under the related Telenet SPE Funded Facility, the applicable Telenet SPE will redeem an aggregate principal amount of its Telenet SPE Notes equal to the principal amount of the loans so prepaid and (ii) November 15, 2013, upon the voluntary prepayment of Telenet Facility N, which may only be voluntarily prepaid in whole and not in part, Telenet Finance II will redeem all of the Telenet Finance II Notes at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest and, in the case of the Telenet SPE Notes, other than the Telenet Finance II Notes, Additional Amounts (as defined in the applicable Telenet SPE Indenture), if any, to the applicable redemption date, if redeemed during the twelve-month period commencing on (a) November 15 for the Telenet Finance Notes and the Telenet Finance II Notes, (b) February 15 for the Telenet Finance III Notes, (c) June 15 for the Telenet Finance IV Notes and (d) August 15 for the Telenet Finance V Notes, of the years set forth below: |
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| | Redemption Price | | | | | | | | | | | | | | |
Year | | Telenet | | Telenet | | Telenet | | Telenet | | 6.25% Telenet | | 6.75% Telenet | | | | | | | | | | | | | | |
Finance | Finance II | Finance III | Finance IV | Finance V | Finance V | | | | | | | | | | | | | | |
Notes | Notes | Notes | Notes | Notes | Notes | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | N.A. | | 101.77% | | N.A. | | 102.00% | | N.A. | | N.A. | | | | | | | | | | | | | | |
2015 | 103.19% | | 100.88% | | N.A. | | 101.00% | | N.A. | | N.A. | | | | | | | | | | | | | | |
2016 | 102.13% | | 100.00% | | 103.31% | | 100.00% | | N.A. | | N.A. | | | | | | | | | | | | | | |
2017 | 101.06% | | N.A. | | 102.21% | | 100.00% | | 103.13% | | N.A. | | | | | | | | | | | | | | |
2018 | 100.00% | | N.A. | | 101.10% | | 100.00% | | 102.08% | | 103.38% | | | | | | | | | | | | | | |
2019 | 100.00% | | N.A. | | 100.00% | | 100.00% | | 101.56% | | 102.53% | | | | | | | | | | | | | | |
2020 | 100.00% | | N.A. | | 100.00% | | 100.00% | | 100.00% | | 101.69% | | | | | | | | | | | | | | |
2021 | N.A. | | N.A. | | 100.00% | | 100.00% | | 100.00% | | 100.84% | | | | | | | | | | | | | | |
2022 and thereafter | N.A. | | N.A. | | N.A. | | N.A. | | 100.00% | | 100.00% | | | | | | | | | | | | | | |
The details of the Telenet SPE Notes as of December 31, 2013 are summarized in the following table: |
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| | | | | | | Outstanding | | | | | | | | | |
principal amount | | | | | |
Telenet SPEs Notes | | | Maturity | | Interest rate | | Borrowing | | U.S. $ | | Estimated | | Carrying | | | | | |
currency | equivalent | fair value | value | | | | | |
| | | | | | | in millions | | | | | |
| | | | | | | | | | | | | | | | | | |
Telenet Finance Notes | | November 15, 2020 | | 6.38% | | € | 500 | | | $ | 689.5 | | | $ | 744.2 | | | $ | 689.5 | | | | | | |
| | | | |
Telenet Finance II Notes (a) | | November 15, 2016 | | 5.30% | | € | 100 | | | 137.9 | | | 140.7 | | | 139.2 | | | | | | |
| | | | |
Telenet Finance III Notes | | February 15, 2021 | | 6.63% | | € | 300 | | | 413.7 | | | 448.3 | | | 413.7 | | | | | | |
| | | | |
Telenet Finance IV Notes | | June 15, 2021 | | EURIBOR + 3.875% | | € | 400 | | | 551.6 | | | 554.5 | | | 551.6 | | | | | | |
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6.25% Telenet Finance V Notes | | August 15, 2022 | | 6.25% | | € | 450 | | | 620.5 | | | 660.8 | | | 620.5 | | | | | | |
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6.75% Telenet Finance V Notes | | August 15, 2024 | | 6.75% | | € | 250 | | | 344.7 | | | 368 | | | 344.7 | | | | | | |
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Total | | $ | 2,757.90 | | | $ | 2,916.50 | | | $ | 2,759.20 | | | | | | |
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(a) | The carrying amount includes the impact of a premiums. | | | | | | | | | | | | | | | | | | | | | | | | | |
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Liberty Puerto Rico Bank Facility |
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Prior to August 13, 2012, Old Liberty Puerto Rico’s bank facility (the Old Liberty Puerto Rico Bank Facility) consisted of (i) a $150.0 million amortizing term loan, (ii) a $20.0 million amortizing delayed draw senior credit facility and (iii) a $10.0 million revolving loan. All amounts borrowed under the Old Liberty Puerto Rico Bank Facility bore interest at a margin of 2.00% over LIBOR. |
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On August 13, 2012, Old Liberty Puerto Rico entered into a new bank credit facility (the August 2012 Liberty Puerto Rico Bank Facility), the proceeds of which were used to repay the Old Liberty Puerto Rico Bank Facility and for general corporate purposes. The August 2012 Liberty Puerto Rico Bank Facility provided for (i) a $175.0 million senior secured term loan (the August 2012 LPR Term Loan) at an issue price of 99.0% and (ii) a $10.0 million senior secured revolving credit facility (the August 2012 LPR Revolving Loan). The August 2012 LPR Term Loan began amortizing at 1% per year on September 15, 2012. In connection with these transactions, we recognized aggregate losses on debt extinguishment of $4.4 million during the third quarter of 2012, including (i) $3.8 million of third-party costs incurred in connection with the August 2012 Liberty Puerto Rico Bank Facility and (ii) the write-off of deferred financing fees of $0.6 million relating to repayment of the Old Liberty Puerto Rico Bank Facility. |
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In connection with the November 8, 2012 completion of the Puerto Rico Transaction (as described in note 3), (i) we began to consolidate the existing bank credit facility of OneLink, (ii) borrowings under the August 2012 LPR Term Loan became a new pari passu tranche of OneLink’s existing bank credit facility, with OneLink as the borrower, (iii) the August 2012 LPR Revolving Loan was canceled and (iv) OneLink was renamed as Liberty Puerto Rico. Subsequent to the completion of the Puerto Rico Transaction, the bank credit facility of Liberty Puerto Rico is referred to as the “Liberty Puerto Rico Bank Facility.” |
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At December 31, 2013, the Liberty Puerto Rico Bank Facility consists of (i) a $145.0 million second lien term loan (the LPR Term Loan A), (ii) a $345.0 million term loan (the LPR Term Loan B), (iii) the $175.0 million August 2012 LPR Term Loan and (iv) a $25.0 million revolving credit facility (the LPR Revolving Loan), of which $10.0 million was drawn at December 31, 2013. All amounts borrowed under the LPR Term Loan A, the LPR Term Loan B and the LPR Revolving Loan bear interest, at Liberty Puerto Rico’s option, at either (i) LIBOR multiplied by the Statutory Reserve Rate (as defined in the Liberty Puerto Rico Bank Facility) with a LIBOR floor of 1.50% or (ii) the Base Rate (as defined in the Liberty Puerto Rico Bank Facility) with a Base Rate floor of 2.50%. All amounts borrowed under the August 2012 LPR Term Loan bear interest, at Liberty Puerto Rico’s option, at either (i) LIBOR plus 4.50% with a LIBOR floor of 1.50% or (ii) Base Rate (as defined in the Liberty Puerto Rico Bank Facility) plus 3.50% with a Base Rate floor of 2.50%. The LPR Term Loan A, the LPR Term Loan B, the August 2012 LPR Term Loan and the LPR Revolving Loan have final maturities of June 9, 2018, June 9, 2017, June 9, 2017 and June 9, 2016, respectively. The LPR Revolving Loan has a commitment fee on unused and uncanceled balances of 0.5% or 0.375% depending on the then Total Leverage Ratio (as defined in the Liberty Puerto Rico Bank Facility). |
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In addition to customary restrictive covenants, prepayment requirements and events of default, including defaults on other indebtedness of Liberty Puerto Rico and its subsidiaries, the Liberty Puerto Rico Bank Facility requires compliance with the following financial covenants: (i) Total Leverage Ratio and (ii) First Lien Leverage Ratio, each capitalized term as defined in the Liberty Puerto Rico Bank Facility. The Liberty Puerto Rico Bank Facility permits Liberty Puerto Rico to transfer funds to its parent company (and indirectly to Liberty Global) through loans, dividends or other distributions provided that Liberty Puerto Rico maintains compliance with applicable covenants. |
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The Liberty Puerto Rico Bank Facility is secured by pledges over (i) the Liberty Puerto Rico shares indirectly owned by our company and (ii) certain other assets owned by Liberty Puerto Rico. |
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Ziggo Margin Loan |
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On April 26, 2013, LGE HoldCo V entered into the Ziggo Margin Loan with a financial institution. The Ziggo Margin Loan provides for the ability of LGE HoldCo V to incur debt through additional facilities, which could be used to fund purchases of additional Ziggo shares up to a maximum of 48.0 million shares in the aggregate across all facilities. Any amounts borrowed under the Ziggo Margin Loan can be used for general corporate purposes, including distributions and/or loans to other subsidiaries of Liberty Global. Any drawdown under the Ziggo Margin Loan is subject to the satisfaction of certain customary conditions precedent. The Ziggo Margin Loan does not contain any financial covenants and provides for certain adjustment events and customary events of default. The Ziggo Margin Loan includes various lender early termination events (which are subject to materiality and other thresholds), including with respect to any delisting of the Ziggo shares, changes to the Ziggo share price and average daily trading volume of the Ziggo shares over a 30-day period and a change of control of LGE HoldCo V. |
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The Ziggo Margin Loan is secured by a pledge agreement over Ziggo shares owned by LGE HoldCo V, which provides that LGE HoldCo V, prior to an Enforcement Event (as defined in the Ziggo Margin Loan), will be able to exercise voting and consensual rights subject to the terms of the Ziggo Margin Loan, and receive dividends on the Ziggo shares subject to compliance with certain loan-to-value ratios. |
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The initial facility under the Ziggo Margin Loan provides for borrowings of up to 65.0% of the value of the Ziggo shares pledged on the date prior to the date of utilization. The initial facility matures on April 26, 2016, and bears interest at a rate of EURIBOR plus 2.85% per annum. In addition to the lender early termination events described above, there is also a requirement for repayment of the initial facility if the loan-to-value ratio is equal to or greater than 80.0% (after taking into account any cash collateral deposited on account for the lenders). On May 30, 2013, the full amount of the initial tranche of the Ziggo Margin Loan was drawn, in the amount of €460.0 million ($634.3 million), and secured with a pledge of 25,300,000 Ziggo shares. On July 24, 2013, we pledged an additional 2,000,000 Ziggo shares as security for the Ziggo Margin Loan. |
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For information regarding our investment in Ziggo, see note 5. |
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LGI Convertible Notes |
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In November 2009, LGI completed the offering and sale of its 4.50% convertible senior notes due November 15, 2016 (the LGI Convertible Notes). Interest was payable semi-annually, in arrears, on May 15 and November 15 of each year, beginning May 15, 2010. The LGI Convertible Notes were senior unsecured obligations of LGI that were convertible into LGI common stock. During the second and third quarters of 2011, we completed the exchange (the LGI Notes Exchange) of 99.8% and 0.2%, respectively, of the $935.0 million principal amount of the LGI Convertible Notes for aggregate consideration of 26,423,266 shares of LGI Series A common stock, 8,807,772 shares of LGI Series C common stock and $186.7 million of cash (excluding cash paid for accrued but unpaid interest). In connection with these transactions, we (i) reclassified (a) the $676.2 million carrying amount of the debt component of the exchanged LGI Convertible Notes, (b) the related deferred financing costs of $13.6 million and (c) the $96.7 million net deferred tax liability associated with the exchanged LGI Convertible Notes to additional paid-in capital and common stock in our consolidated balance sheet and (ii) recognized aggregate debt conversion losses of $187.2 million. |
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UGC Convertible Notes |
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On April 6, 2004, UnitedGlobalCom, Inc. (UGC), a wholly-owned subsidiary of Liberty Global, completed the offering and sale of €500.0 million ($689.5 million) principal amount of 1.75% euro-denominated convertible senior notes (the UGC Convertible Notes). The UGC Convertible Notes were senior unsecured obligations of UGC that under certain circumstances were convertible into LGI common stock. Interest was payable semi-annually on April 15 and October 15 of each year. |
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On March 15, 2011, we called for redemption the remaining €328.2 million ($452.6 million) principal amount outstanding of the UGC Convertible Notes. As a result of the call for redemption, note holders became entitled to convert their UGC Convertible Notes into LGI common stock at the specified ratios during a conversion period ending on April 18, 2011. During this conversion period, all of the outstanding principal amount of the UGC Convertible Notes was converted into an aggregate of 7,328,994 shares of LGI Series A common stock and 7,249,539 shares of LGI Series C common stock. In connection with the conversion of the UGC Convertible Notes into LGI common stock, we reclassified (i) the $619.7 million carrying value of the UGC Convertible Notes and (ii) the $53.9 million net deferred tax asset associated with the exchanged UGC Convertible Notes to additional paid-in capital and common stock in our consolidated balance sheet. Prior to conversion, the UGC Convertible Notes were measured at fair value. |
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Maturities of Debt and Capital Lease Obligations |
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Maturities of our debt and capital lease obligations as of December 31, 2013 are presented below for the named entity and its subsidiaries, unless otherwise noted. Amounts presented below represent U.S. dollar equivalents based on December 31, 2013 exchange rates: |
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Debt: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Virgin Media | | UPC | | Unitymedia KabelBW | | Telenet (a) | | Other | | Total | | | |
Holding (a) | | | |
| in millions | | | |
Year ending December 31: | | | | | | | | | | | | | | |
2014 | $ | 117.4 | | | $ | 427.3 | | | $ | 49.6 | | | $ | 10.2 | | | $ | 183.1 | | | $ | 787.6 | | | | |
| | |
2015 | — | | | 153.1 | | | — | | | 10.2 | | | 191.2 | | | 354.5 | | | | |
| | |
2016 | — | | | 752.3 | | | — | | | 148.1 | | | 1,451.90 | | | 2,352.30 | | | | |
| | |
2017 | — | | | — | | | — | | | 604.6 | | | 1,087.00 | | | 1,691.60 | | | | |
| | |
2018 | 2,449.60 | | | 400 | | | — | | | 251.5 | | | 335.5 | | | 3,436.60 | | | | |
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Thereafter | 10,839.10 | | | 11,726.90 | | | 7,655.00 | | | 3,848.10 | | | — | | | 34,069.10 | | | | |
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Total debt maturities | 13,406.10 | | | 13,459.60 | | | 7,704.60 | | | 4,872.70 | | | 3,248.70 | | | 42,691.70 | | | | |
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Unamortized premium (discount) | 216.9 | | | (42.2 | ) | | (3.2 | ) | | 1.3 | | | (8.5 | ) | | 164.3 | | | | |
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Total debt | $ | 13,623.00 | | | $ | 13,417.40 | | | $ | 7,701.40 | | | $ | 4,874.00 | | | $ | 3,240.20 | | | $ | 42,856.00 | | | | |
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Current portion | $ | 120.2 | | | $ | 427.3 | | | $ | 49.6 | | | $ | 10.2 | | | $ | 183.1 | | | $ | 790.4 | | | | |
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Noncurrent portion | $ | 13,502.80 | | | $ | 12,990.10 | | | $ | 7,651.80 | | | $ | 4,863.80 | | | $ | 3,057.10 | | | $ | 42,065.60 | | | | |
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_______________ |
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(a) | Amounts include the UPCB SPE Notes and the Telenet SPE Notes issued by the UPCB SPEs and the Telenet SPEs, respectively. As described above, the UPCB SPEs are consolidated by UPC Holding and the Telenet SPEs are consolidated by Telenet. | | | | | | | | | | | | | | | | | | | | | | | | | |
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Capital lease obligations: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Unitymedia KabelBW | | Telenet | | Virgin Media | | Other | | Total | | | | | | | |
| in millions | | | | | | | |
Year ending December 31: | | | | | | | | | | | | | | | | |
2014 | $ | 101.3 | | | $ | 73.1 | | | $ | 160.3 | | | $ | 19.1 | | | $ | 353.8 | | | | | | | | |
| | | | | | |
2015 | 101.1 | | | 68.1 | | | 112.9 | | | 18.9 | | | 301 | | | | | | | | |
| | | | | | |
2016 | 101.1 | | | 66.4 | | | 63.2 | | | 15.9 | | | 246.6 | | | | | | | | |
| | | | | | |
2017 | 101.1 | | | 64.6 | | | 17 | | | 8.2 | | | 190.9 | | | | | | | | |
| | | | | | |
2018 | 101.1 | | | 61 | | | 4.6 | | | 3.6 | | | 170.3 | | | | | | | | |
| | | | | | |
Thereafter | 1,201.80 | | | 279.1 | | | 241 | | | 27.5 | | | 1,749.40 | | | | | | | | |
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Total principal and interest payments | 1,707.50 | | | 612.3 | | | 599 | | | 93.2 | | | 3,012.00 | | | | | | | | |
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Amounts representing interest | (755.5 | ) | | (161.1 | ) | | (225.5 | ) | | (21.6 | ) | | (1,163.7 | ) | | | | | | | |
Present value of net minimum lease payments | $ | 952 | | | $ | 451.2 | | | $ | 373.5 | | | $ | 71.6 | | | $ | 1,848.30 | | | | | | | | |
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Current portion | $ | 28.9 | | | $ | 45.3 | | | $ | 144 | | | $ | 14.8 | | | $ | 233 | | | | | | | | |
| | | | | | |
Noncurrent portion | $ | 923.1 | | | $ | 405.9 | | | $ | 229.5 | | | $ | 56.8 | | | $ | 1,615.30 | | | | | | | | |
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Non-cash Refinancing Transactions |
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During 2013, 2012 and 2011, certain of our refinancing transactions included non-cash borrowings and repayments of debt aggregating $5,061.5 million, $3,793.4 million and $2,908.0 million, respectively. We also recorded a $3,557.5 million non-cash increase to our debt as a result of certain financing transactions completed in contemplation of the Virgin Media Acquisition. For additional information, see note 3. |
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Subsequent Events |
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For information concerning certain financing transactions completed subsequent to December 31, 2013, see note 19. |