Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt

v2.4.1.9
Long-Term Debt
3 Months Ended
Mar. 31, 2015
Long-term Debt, Unclassified [Abstract]  
Long-Term Debt

 

(10)   Long-Term Debt

Debt is summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding

 

 

 

 

 

 

 

 

principal at

 

Carrying value

 

 

    

March 31, 2015

    

March 31, 2015

    

December 31, 2014

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

Corporate level debentures

 

 

 

 

 

 

 

 

 

8.5% Senior Debentures due 2029

 

$

287 

 

 

285 

 

285 

 

8.25% Senior Debentures due 2030

 

 

504 

 

 

501 

 

501 

 

1% Exchangeable Senior Debentures due 2043

 

 

346 

 

 

400 

 

444 

 

Subsidiary level notes and facilities

 

 

 

 

 

 

 

 

 

QVC 3.125% Senior Secured Notes due 2019

 

 

400 

 

 

399 

 

399 

 

QVC 7.375% Senior Secured Notes due 2020

 

 

500 

 

 

500 

 

500 

 

QVC 5.125% Senior Secured Notes due 2022

 

 

500 

 

 

500 

 

500 

 

QVC 4.375% Senior Secured Notes due 2023

 

 

750 

 

 

750 

 

750 

 

QVC 4.850% Senior Secured Notes due 2024

 

 

600 

 

 

600 

 

600 

 

QVC 4.45% Senior Secured Notes due 2025

 

 

600 

 

 

599 

 

599 

 

QVC 5.45% Senior Secured Notes due 2034

 

 

400 

 

 

399 

 

399 

 

QVC 5.95% Senior Secured Notes due 2043

 

 

300 

 

 

300 

 

300 

 

QVC Bank Credit Facilities

 

 

450 

 

 

450 

 

508 

 

Other subsidiary debt

 

 

65 

 

 

65 

 

75 

 

Total QVC Group debt

 

$

5,702 

 

 

5,748 

 

5,860 

 

Ventures Group

 

 

 

 

 

 

 

 

 

Corporate level debentures

 

 

 

 

 

 

 

 

 

4% Exchangeable Senior Debentures due 2029

 

$

438 

 

 

292 

 

294 

 

3.75% Exchangeable Senior Debentures due 2030

 

 

438 

 

 

293 

 

291 

 

3.5% Exchangeable Senior Debentures due 2031

 

 

351 

 

 

331 

 

325 

 

0.75% Exchangeable Senior Debentures due 2043

 

 

850 

 

 

1,186 

 

1,220 

 

Subsidiary level notes and facilities

 

 

70 

 

 

70 

 

61 

 

Total Ventures Group debt

 

$

2,147 

 

 

2,172 

 

2,191 

 

Total consolidated Liberty debt

 

$

7,849 

 

 

7,920 

 

8,051 

 

Less current classification

 

 

 

 

 

(939)

 

(946)

 

Total long-term debt

 

 

 

 

$

6,981 

 

7,105 

 

 

QVC Senior Secured Notes

QVC was in compliance with all of its debt covenants related to its outstanding senior secured notes at March 31, 2015. 

QVC Bank Credit Facilities

On March 9, 2015, QVC entered into a second amended and restated senior secured credit agreement (the “Second Amended and Restated Credit Agreement”) which is a multi-currency facility that provides for a $2.25 billion revolving credit facility with a $250 million sub-limit for standby letters of credit and $1.5 billion of uncommitted incremental revolving loan commitments or incremental term loans. QVC may elect that the loans extended under the senior secured credit facility bear interest at a rate per annum equal to the ABR Rate or LIBOR, as each is defined in the senior secured credit facility agreement, plus a margin of 0.25% to 1.75% depending on various factors. Each loan may be prepaid in whole or in part without penalty other than customary breakage costs. Any amounts prepaid on the revolving facility may be reborrowed. Payment of the loans may be accelerated following certain customary events of default. The senior secured credit facility is secured by the capital stock of QVC. The purpose of the amendment was to, among other things, extend the maturity of QVC’s senior secured credit facility to March 9, 2020 and lower the interest rate on borrowings.

 

The interest rate on borrowings outstanding under the QVC Bank Credit Facilities was 1.6% at March 31, 2015. Availability under the Second Amended and Restated Credit Agreement at March 31, 2015 was $1.8 billion.

 

The Second Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on QVC and each of its restricted subsidiaries (subject to certain exceptions) 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; 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; and limiting QVC’s consolidated leverage ratio. QVC was in compliance with all debt covenants related to the Second Amended and Restated Credit Agreement at March 31, 2015.

 

Exchangeable Senior Debentures

Liberty has elected to account for the exchangeable senior debentures using the fair value option. Accordingly, changes in the fair value of these instruments are recognized as unrealized gains (losses) in the statements of operations.  Liberty reviews the terms of the debentures on a quarterly basis to determine whether a triggering event has occurred to require current classification of the exchangeables upon a call event.  As of March 31, 2015 the balance of the 4% Exchangeable Senior Debentures due 2029, the 3.75% Exchangeable Senior Debentures due 2030 and the 3.5% Exchangeable Senior Debentures due 2031 have been classified as current.

 

As discussed in note 8, HSNi declared a special dividend during January 2015 of $10 per share from which Liberty received approximately $200 million in cash during February 2015.  Pursuant to the terms of the 1% Exchangeable Senior Debentures due 2043 (the “HSNi Exchangeables”), a portion of the special dividend was passed through to the holders of the notes ($54 million) and the outstanding principal balance of the HSNi Exchangeables was reduced during March 2015. Additionally, the portion of the quarterly dividend in excess of the regular cash dividend of $0.18 per share was passed through to bondholders during the three months ended March 31, 2015.

Other Subsidiary Debt

Other subsidiary debt at March 31, 2015 is comprised of capitalized satellite transponder lease obligations and bank debt of certain subsidiaries.

Fair Value of Debt

Liberty estimates the fair value of its debt based on the quoted market prices for the same or similar issues or on the current rate offered to Liberty for debt of the same remaining maturities (Level 2). The fair value of Liberty's publicly traded debt securities that are not reported at fair value in the accompanying condensed consolidated balance sheet at March 31, 2015 are as follows (amounts in millions):

 

 

 

 

 

 

Senior debentures

 

$

884 

 

QVC senior secured notes

    

$

4,151 

 

 

Due to the variable rate nature, Liberty believes that the carrying amount of its other debt, not discussed above, approximated fair value at March 31, 2015.