Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On October 15, 2020, GCI, LLC (the “Borrower”), a wholly owned subsidiary of GCI Liberty, Inc. (“GCI Liberty”), entered into an Amendment Agreement among the Borrower, the subsidiary guarantors party thereto, Ventures Holdco, LLC, the lenders party thereto, Credit Agricole Corporate and Investment Bank, as administrative agent, and the other parties thereto (the “Amendment Agreement”). The Amendment Agreement amended and restated the Sixth Amended and Restated Credit Agreement of the Borrower dated as of December 27, 2018, to, among other things, (i) extend the maturity date of the borrowings and commitments under the revolving credit facility and the Term Loan B and (ii) increase the aggregate principal amount of the Term Loan B (the “Amended Credit Facilities”).
The Amended Credit Facilities include a $550 million revolving credit facility, with a $25 million sub-limit for standby letters of credit, and a $400 million Term Loan B. The borrowings under the Amended Credit Facilities bear interest at either the alternate base rate or LIBOR (based on an interest period selected by the Borrower of one month, two months, three months or six months) at the Borrower’s election in each case plus a margin. The revolving credit facility borrowings that are alternate base rate loans bear interest at a per annum rate equal to the alternate base rate plus a margin that varies between 0.50% and 1.75% depending on the Borrower’s total leverage ratio. The revolving credit facility borrowings that are LIBOR loans bear interest at a per annum rate equal to the applicable LIBOR plus a margin that varies between 1.50% and 2.75% depending on the Borrower’s total leverage ratio. Term Loan B borrowings that are alternate base rate loans bear interest at a per annum rate equal to the alternate base rate plus a margin of 1.75%. Term Loan B borrowings that are LIBOR loans bear interest at a per annum rate equal to the applicable LIBOR plus a margin of 2.75%.
The borrowings under the revolving credit facility and the Term Loan B are scheduled to mature on October 15, 2025; provided that, if the Term Loan B is not refinanced or repaid in full prior to April 15, 2025, then the borrowings under the revolving credit facility will mature on April 15, 2025. Principal payments are due quarterly on the Term Loan B equal to 0.25% of the original principal amount. The loans are subject to customary mandatory prepayment provisions. Each loan may be prepaid at any time and from time to time without penalty other than customary breakage costs and, in the case of the Term Loan B, subject to a customary six month “soft call.” Any amounts prepaid on the revolving credit facility may be reborrowed.
The payment and performance of the Borrower’s obligations under the Amended Credit Facilities are guaranteed by the each of the Borrower’s subsidiaries, other than certain excluded subsidiaries, and are secured by security interests on substantially all of the assets of the Borrower and the subsidiary guarantors and a pledge of the equity interests in each subsidiary guarantor.
The Amended Credit Facilities contain certain affirmative and negative covenants, including certain restrictions on the Borrower and its subsidiaries with respect to, among other things: incurring additional indebtedness; creating liens on property or assets; making certain loans or investments; selling or disposing of assets or equity of subsidiaries; paying certain dividends and other restricted payments; dissolving, consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; restricting subsidiary distributions; acquiring businesses; prepaying certain indebtedness; amending certain material agreements; entering into hedging arrangements; and the Borrower’s first lien leverage ratio.
In addition, upon the consummation of the acquisition of GCI Liberty by Liberty Broadband Corporation (“Liberty Broadband”) pursuant to the terms of the previously announced merger agreement under which Liberty Broadband has agreed to acquire GCI Liberty in a stock-for-stock merger, the covenant that generally requires that the fair market value of the consolidated net assets of the Liberty Subsidiaries (as defined in the Amended Credit Facilities) equal at least $3.0 billion at the time of, among other things, certain activities of Liberty Subsidiaries, including but not limited to, incurrence of indebtedness, restricted payments, asset sales and incurrence of liens by any Liberty Subsidiary, will cease to be in effect.
Borrowings under the revolving credit facility and the Term Loan B were used at closing, along with cash on hand, to redeem all $325 million aggregate outstanding principal amount of the Borrower’s 6.625% Senior Notes due
