On Friday, April 19, 2020, the Walt Disney Company entered into a 364-Day Credit Agreement with Citibank for up to $5 billion.
According to the filing:
“The proceeds of which may be used for general corporate purposes. The Credit Agreement is unsecured and includes a guarantee by TWDC Enterprises of the Company’s payment obligations, which guarantee is subject to release and discharge upon certain circumstances.”
The interest rate is to be based on the company’s “public debt rating that range between 0.875% and 1.500% for Eurocurrency Rate (as defined in the Credit Agreement) borrowings and 0.000% and 0.500% for Base Rate (as defined in the Credit Agreement) borrowings”
Seeking Alpha has a copy of the agreement that was filed HERE.
This agreement is set to “mature” on April 9, 2021, but Disney has the option to extend the maturity for an extra 364-day period subject to Citibank’s consent. The agreement also states that “Advances may be voluntarily prepaid without penalty or premium, other than customary breakage costs related to prepayments of Eurocurrency Rate borrowings.”
This puts Disney over $12 billion in borrowed funds between this deal and the prior Debt Market deals in the United States and Canada. Disney needs movies and the parks to come back online as soon as possible, but it’s looking more and more like we will have shut-downs into early summer and possibly longer.
Hopefully they don’t have to continue to borrow more.
What do you think? Comment and let us know.
Source: Seeking Alpha, WDWNT
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