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Netflix Inks $500MM Revolver With Syndicate Including Deutsche Bank, Goldman Sachs

July 31, 2017, 07:34 AM
Filed Under: Entertainment

Netflix, Inc. has entered into a revolving credit agreement with a group of five lenders as part of a push to expand its original programming lineup. The new financing raises the online media company's total line of credit to $19.65 billion, according to a report from Sky News.

According to a regulatory filing, the agreement provides for a $500 million unsecured revolving credit facility, with an uncommitted incremental facility to increase the amount of the revolving credit facility by up to an additional $250 million, subject to certain terms and conditions as set forth therein. Immediately upon closing, the Company will not borrow any amount under the revolving credit facility.  The Company may use the proceeds of future borrowings under the Revolving Credit Agreement for working capital and general corporate purposes.

"We continue to debt finance our capital needs as we believe this reduces our weighted average cost of capital, resulting in a more efficient capital structure," the company said in its latest quarterly report dated July 17.

Lenders party to the new Credit Agreement are Deutsche Bank AG New York Branch, Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, N.A.

Revolving loans may be borrowed, repaid and reborrowed until July 27, 2022, at which time all amounts borrowed must be repaid. Revolving loans may be prepaid without premium or penalty, subject to customary breakage costs for loans bearing interest at the Adjusted LIBO Rate.

Revolving loans will bear interest, at the Company’s option, at either (i) a floating rate per annum equal to a base rate (the “Alternate Base Rate”) or (ii) a per annum rate equal to an adjusted London interbank offered rate (the “Adjusted LIBO Rate”), plus a margin of 0.75%. The Alternate Base rate is defined as the greatest of (A) the rate of interest published by the Wall Street Journal, from time to time, as the prime rate, (B) the federal funds rate, plus 0.500% and (C) the Adjusted LIBO Rate for a one-month interest period, plus 1.00%. The Adjusted LIBO Rate is defined as the London interbank offered rate for deposits in U.S. dollars, for the relevant interest period, adjusted for statutory reserve requirements, but in no event shall the Adjusted LIBO Rate be less than 0.00% per annum.

The Revolving Credit Agreement requires the Company to pay accrued interest (i) quarterly in arrears on each outstanding loan bearing interest at the Alternate Base Rate and (ii) on the last day of the interest period applicable to any loan bearing interest at the Adjusted LIBO Rate and, for interest periods of more than three months duration, intervals of three months’ duration. Interest periods for any loan bearing interest at the Applicable LIBO Rate may be, at the Company’s option, one, two, three or six months (or twelve months or less than one month with consent of each lender).

A default interest rate shall apply on overdue amounts (i) upon the occurrence and during the continuance of a payment or bankruptcy event of default under the Revolving Credit Agreement or (ii) at the request of the required lenders, upon the occurrence and during the continuance of any other event of default under the Revolving Credit Agreement at a rate per annum equal to (x) in the case of overdue principal of any loan, 2.00%, plus the rate otherwise applicable to such loan or (y) in the case of any other overdue amount, 2.00%, plus the rate applicable to loans bearing interest at the Alternate Base Rate.

A commitment fee accrues on the unused portion of the revolving commitments at a rate of 0.10% per annum. The Company is also obligated to pay customary fees for a revolving credit facility of this size and type.

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