Item 1.01. Entry into a Material Definitive Agreement
Lions Gate Senior Notes
On October 27, 2016, LG FinanceCo Corp. (“
FinanceCo
”),
a wholly owned subsidiary of Lions Gate, completed an offering of $520,000,000 aggregate principal amount of 5.875% senior notes
due in 2024 (the “
Notes
”), the proceeds of which were used in connection with the Merger. The Notes were issued
pursuant to an indenture, dated as of October 27, 2016, between FinanceCo and Deutsche Bank Trust Company Americas, as trustee
(the “
Base Indenture
”). In connection with the Merger, on the Closing Date, Lions Gate and certain of its subsidiaries,
including the Company and certain of its subsidiaries (collectively, the “
Guarantors
”), and Deutsche Bank Trust
Company Americas, as trustee, entered into a supplemental indenture to the Base Indenture (the “
Supplemental Indenture
”
and together with the Base Indenture, the “
Indenture
”), pursuant to which the Guarantors jointly and severally,
fully and unconditionally, guaranteed the Notes on an unsubordinated, unsecured basis.
The description of the Indenture contained herein is not intended
to be complete and is qualified in its entirety by reference to the full text of the Base Indenture, which was filed with the Securities
and Exchange Commission (the “
SEC
”) by Lions Gate as Exhibit 4.1 to its Current Report on Form 8-K, on October
27, 2016, and of the Supplemental Indenture, which is filed herewith as Exhibit 4.1, each of which is incorporated herein by reference.
Lions Gate Senior Credit Facilities
In connection with the consummation of the Merger, Lions Gate entered
into a Credit and Guarantee Agreement (the “
Credit Agreement
”), dated as of the Closing Date, among Lions Gate,
as borrower, the Guarantors, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as administrative agent. The Credit
Agreement provides for a $1.0 billion revolving credit facility (the “
Revolver
”), a $1.0 billion term loan A
facility (“
Term Loan A
”) and a $2.0 billion term loan B facility (“
Term Loan B
” and together
with the Revolver and Term Loan A, the “
Senior Credit Facilities
”). The Revolver and Term Loan A mature on the
date that is five years after the Closing Date, and Term Loan B matures on the date that is seven years after the Closing Date.
The Senior Credit Facilities are guaranteed by the Guarantors and
are secured by a security interest in substantially all of the assets of Lions Gate and the Guarantors, subject to certain exceptions.
The Revolver and Term Loan A will bear interest initially at a rate
per annum equal to LIBOR plus 2.50% (or an alternative base rate plus 1.50%), subject to reductions in the margin of up to 50 basis
points (two reductions of 25 basis points each) upon achievement of certain net first lien leverage ratios. Term Loan B will bear
interest at a rate per annum equal to LIBOR (subject to a LIBOR floor of 0.75%) plus 3.00% (or an alternative base rate plus 2.00%).
Lions Gate will also pay certain undrawn commitment fees in connection with the Revolver.
Term Loan A amortizes quarterly beginning the last day of the first
full fiscal quarter ending after the Closing Date at quarterly rates of 1.25% for the first and second years after the Closing
Date, 1.75% for the third year, and 2.50% for the fourth and fifth years, with the balance payable at maturity. Term Loan B
amortizes
quarterly beginning on the last day of the first full fiscal quarter ending after the Closing Date at an annual rate of 1%, with
the balance payable at maturity. Term Loan A and Term Loan B also require mandatory prepayments in connection with certain asset
sales, subject to certain significant exceptions, and Term Loan B is subject to additional mandatory repayment from specified percentages
of excess cash flow. Additionally, Term Loan B requires Lions Gate to pay a 1.00% prepayment fee if the loans thereunder are subject
to certain “repricing” transactions within the first six months following the Closing Date.
The Senior Credit Facilities contain representations and warranties,
events of default and affirmative and negative covenants that are customary for similar financings and which include, among other
things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur
additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. In addition, a net
first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolver and Term Loan
A and are tested quarterly.
The description of the Credit Agreement contained herein is not
intended to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed
herewith as Exhibit 10.1, and which is incorporated herein by reference.
Item 1.02. Termination of a Material Definitive Agreement
On the Closing Date, the Company paid in full all amounts owing
under that certain Credit Agreement, dated as of April 20, 2015, among Starz, LLC, as the borrower, the lenders party thereto and
The Bank of Nova Scotia, as administrative agent, and terminated all commitments to extend further credit thereunder.
On the Closing Date, the Company also satisfied and discharged its
obligations under the Indenture, dated as of September 13, 2012, among Starz, LLC and Starz Finance Corp., as issuers, the guarantors
party thereto, and U.S. Bank National Association, as trustee (the “
Starz Trustee
”) by irrevocably depositing
with the Starz Trustee funds sufficient to redeem in full the $675 million of 5.00% Senior Notes due 2019, and issued a notice
of redemption in respect of such notes, with a redemption date of January 7, 2017.