| Item 1.01. | Entry into a Material Definitive Agreement. |
On June 14, 2023, Fox Corporation (the “Company”) entered into a credit agreement (the “Revolving Credit Agreement”), among the Company, as Borrower, the initial lenders named therein (the “Lenders”), the initial issuing banks named therein, Citibank, N.A. (“Citibank”), as Administrative Agent, Deutsche Bank Securities Inc. (“Deutsche Bank”) and Goldman Sachs Bank USA (“Goldman Sachs”), as Co-Syndication Agents, and JPMorgan Chase Bank, N.A. (“JPM”) and Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”), as Co-Documentation Agents.
The Revolving Credit Agreement, which provides for a revolving credit facility on terms substantially similar to the Existing Credit Agreement (as defined below), was entered into in anticipation of (i) the transition away from the London Interbank Offered Rate (LIBOR) and (ii) the scheduled termination of the Credit Agreement, dated as of March 15, 2019, among the Company, as Borrower, and the other parties party thereto, as amended (the “Existing Credit Agreement”), in accordance with its terms in March 2024.
The Revolving Credit Agreement consists of a $1.0 billion (which the Company may request to increase to $1.75 billion) five-year unsecured revolving credit facility with a sublimit of $150.0 million available for the issuance of letters of credit denominated in U.S. dollars. Funds from the Revolving Credit Agreement are available for the general corporate purposes of the Company and its subsidiaries. The maturity date is June 14, 2028, which may, under certain circumstances, be extended for up to two additional one-year periods at the Company’s request. The Company may terminate, in whole or in part, the unused portion of the credit facility commitments under the Revolving Credit Agreement at any time during the term of the Revolving Credit Agreement. Once terminated, a commitment may not be reinstated.
Any advance by the Lenders to the Company as part of a borrowing under the Revolving Credit Agreement may be available, at the Company’s option, at either (1) the Base Rate (as defined in the Revolving Credit Agreement) which is a fluctuating interest rate per annum equal to the sum of (a) the highest of (i) the prime rate, (ii) the Federal Funds Rate (as defined in the Revolving Credit Agreement) plus 0.50% or (iii) the Adjusted Term SOFR (as described below) for a one-month interest period plus 1.00% (but not less than zero) plus (b) the applicable margin for Base Rate advances, or (2) the Adjusted Term SOFR (as defined in the Revolving Credit Agreement), which is a periodic fixed interest rate per annum equal to Term SOFR (as defined in the Revolving Credit Agreement) plus an adjustment equal to 0.10% per annum (but not less than zero) plus the applicable margin for Term SOFR advances. The applicable margins for Base Rate advances and Term SOFR advances are based on the Company’s long-term senior unsecured non-credit enhanced debt ratings.
Under the Revolving Credit Agreement, the Company is required to pay a facility fee based on the Company’s long-term senior unsecured non-credit enhanced debt ratings.
The Revolving Credit Agreement contains customary affirmative and negative covenants substantially consistent with the Existing Credit Agreement (each with customary exceptions). Additionally, consistent with the Existing Credit Agreement, the Revolving Credit Agreement requires the Company to maintain an operating income leverage ratio of 4.5 to 1.0, subject to increase for four quarters in certain situations in connection with material acquisitions.
At this time, the Company has not borrowed any funds under the Revolving Credit Agreement.
In addition to Citibank, as Administrative Agent, Deutsche Bank and Goldman Sachs, as Co-Syndication Agents, and JPM and Morgan Stanley, as Co-Documentation Agents, the members of the syndicate include: Citibank, Deutsche Bank, Goldman Sachs, JPM and Morgan Stanley, as Joint Lead Arrangers and Joint Bookrunners, and Citibank, Deutsche Bank AG New York Branch, Goldman Sachs, JPM and Morgan Stanley Bank, N.A., as Lenders. In the ordinary course of their respective businesses, one or more of the Lenders, or their affiliates, have or may have various relationships with the Company and its subsidiaries involving the provision of a variety of financial services, including cash management, commercial banking, investment banking, advisory or other financial services, for which they received, or will receive, customary fees and expenses. In addition, the Company and its subsidiaries may have entered into or may enter into in the future certain engagements with one or more Lenders or their affiliates relating to specific endeavors.
