United states securities and exchange commission



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(1) The future repayment dates of the convertible senior subordinated notes represent the next redemption date by holders for each series of notes respectively, as described below.

(2) The Term Loan matures on September 7, 2016. The Term Loan is repayable in quarterly installments equal to $13.75 million , with the balance payable on the final maturity date. The Term Loan is also repayable periodically to the extent of the excess cash flow, as defined, generated by Summit and its subsidiaries (see below).



Senior Revolving Credit Facility

Outstanding Amount. At March 31, 2012 , the Company had borrowings of $99.8 million outstanding ( March 31, 2011 —
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Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

$69.8 million ).



Availability of Funds. At March 31, 2012 , there was $230.2 million available ( March 31, 2011 — $255.2 million ). The senior revolving credit facility provides for borrowings and letters of credit up to an aggregate of $340 million . The availability of funds is limited by a borrowing base and also reduced by outstanding letters of credit which amounted to $10.0 million at March 31, 2012 ( March 31, 2011 — $15.0 million ).

Maturity Date. The senior revolving credit facility expires July 25, 2013 .

Interest. As of March 31, 2012 , the senior revolving credit facility bore interest of 2.5% over the “Adjusted LIBOR” rate (effective interest rate of 2.74% and 2.74% as of March 31, 2012 and March 31, 2011 , respectively).

Commitment Fee. The Company is required to pay a quarterly commitment fee based upon 0.5%  per annum on the total senior revolving credit facility of $340 million less the amount drawn.

Security. Obligations under the senior revolving credit facility are secured by collateral (as defined in the credit agreement) granted by the Company and certain subsidiaries of the Company, as well as a pledge of equity interests in certain of the Company’s subsidiaries.

Covenants. The senior revolving credit facility contains a number of affirmative and negative covenants that, among other things, require the Company to satisfy certain financial covenants and restrict the ability of the Company to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of its business, enter into sale-leaseback transactions, transfer and sell material assets and merge or consolidate.
Change in Control. Under the senior revolving credit facility, the Company may also be subject to an event of default upon a change in control (as defined in the credit agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50% (amended from 20% on June 22, 2010) of the Company’s common shares.
Senior Secured Second-Priority Notes

On October 21, 2009 , Lions Gate Entertainment Inc. (“LGEI”), the Company’s wholly-owned subsidiary, issued $236.0 million aggregate principal amount of senior secured second-priority notes due 2016 (the “October 2009 Senior Notes”) in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act.

On May 13, 2011 , LGEI issued approximately $200.0 million aggregate principal amount of senior secured second-priority notes due 2016 (the “May 2011 Senior Notes,” and collectively with the October 2009 Senior Notes, the “Senior Notes”) in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act. The May 2011 Senior Notes have the same terms as the October 2009 Senior Notes, except for the issue date, issue price and first interest payment.

In August 2011, a subsidiary of LGEI paid $9.9 million to repurchase $10.0 million of aggregate principal amount (carrying value — $9.9 million ) of the Senior Notes. The Company recorded a loss on extinguishment in the quarter ended September 30, 2011 of $0.4 million , which included $0.5 million of deferred financing costs written off. In September 2011, LGEI resold such Senior Notes at 99.0% of the $10.0 million face amount thereof, plus accrued interest thereon from May 1, 2011, resulting in gross proceeds of approximately $10.2 million , which were used to repurchase the common shares, as discussed in Note 14.

Outstanding Amount. The outstanding amount is set forth in the table below:





























 

March 31,
2012


 

March 31,
2011


 

(Amounts in thousands)

Principal amount of Senior Secured Second-Priority Notes

$

436,000




 

$

236,000




Unamortized Aggregate Premium/ (Discount), net

(4,490

)

 

(9,669

)

Net carrying amount of Senior Secured Second-Priority Notes

$

431,510




 

$

226,331





Maturity Date. The Senior Notes are due November 1, 2016 .

Original Issue Discount/Premium. The October 2009 Senior Notes were issued by LGEI at an initial price of 95.222%
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Table of Contents

LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(original issue discount — 4.778% ) of the principal amount. The May 2011 Senior Notes were issued by LGEI at an initial price of 102.219% (original issue premium — 2.219% ) of the principal amount, plus accrued interest thereon from May 1, 2011, resulting in gross proceeds of approximately $204.4 million and net proceeds of approximately $192.4 million after fees and expenses, including $5.6 million paid in connection with the consent solicitation of holders of the October 2009 Senior Notes. The original issue discount/premium, interest and deferred financing costs are being amortized through November 1, 2016 using the effective interest method. As of March 31, 2012 , the remaining amortization period was 4.6 years.



Interest. The Senior Notes pay interest semi-annually on May 1 and November 1 of each year at a rate of 10.25%  per year.

Security. The Senior Notes are guaranteed on a senior secured basis by the Company, and certain wholly-owned subsidiaries of both the Company and LGEI. The Senior Notes are ranked junior in right of payment to the Company’s senior revolving credit facility, ranked equally in right of payment to the Company’s convertible senior subordinated notes, and ranked senior to any of the Company’s unsecured debt.
Covenants. The Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations.


Term Loan

In connection with the acquisition of Summit (see Note 15), the Company entered into a new $500.0 million principal amount term loan agreement (the "Term Loan") and received net proceeds of $476.2 million , after original issue discount and offering fees and expenses. The net proceeds were used in connection with the acquisition of Summit to pay off Summit's existing term loan.


Outstanding Amount. The outstanding amount of the Term Loan is set forth in the table below:

















 

March 31,
2012


 

(Amounts in thousands)

Principal amount

$

484,664




Unamortized discount

(7,150

)

Net carrying amount

$

477,514




Maturity Date. The Term Loan matures on September 7, 2016. The Term Loan is repayable in quarterly installments equal to $13.75 million , with the balance payable on the final maturity date. The Term Loan is also repayable periodically to the extent of the excess cash flow, as defined, generated by Summit and its subsidiaries.

Interest. The Term Loan bears interest by reference to a base rate or the LIBOR rate (subject to a LIBOR floor of 1.25% ), in either case plus an applicable margin of 4.50% in the case of base rate loans and 5.50% in the case of LIBOR loans (effective interest rate of 7.75% and 6.75% , respectively as of March 31, 2012 ).

Security. The Term Loan is secured by collateral of the Summit assets.

Covenants. The Term Loan contains a number of affirmative and negative covenants that, among other things, require Summit to satisfy certain financial covenants.
Convertible Senior Subordinated Notes

Outstanding Amount. The following table sets forth the convertible senior subordinated notes outstanding at March 31, 2012 and March 31, 2011 :

 
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LIONS GATE ENTERTAINMENT CORP.

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)












































































 

March 31, 2012

 

March 31, 2011

 

Principal

 

Unamortized

Discount

 

Net Carrying

Amount

 

Principal

 

Unamortized

Discount

 

Net Carrying

Amount

 

(Amounts in thousands)

Convertible Senior Subordinated Notes

 

 

 

 

 

 

 

 

 

 

 

October 2004 2.9375% Notes (conversion price of $11.50 per share)

$

348




 

$






 

$

348




 

$

46,326




 

$

(1,598

)

 

$

44,728




February 2005 3.625% Notes (conversion price of $14.28 per share)

23,464




 






 

23,464




 

23,470




 

(1,363

)

 

22,107




April 2009 3.625% Notes (conversion price of $8.25 per share)

66,581




 

(21,119

)

 

45,462




 

66,581




 

(26,161

)

 

40,420




January 2012 4.00% Notes (conversion price of $10.50 per share)

45,000




 

(9,776

)

 

35,224




 






 






 






 

$

135,393




 

$

(30,895

)

 

$

104,498




 

$

136,377




 

$

(29,122

)

 

$

107,255






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