On March 3, 2023, The Walt Disney Company (the “Company”) entered into a 364-Day Credit Agreement, among the Company, as borrower, TWDC Enterprises 18 Corp. (“TWDC Enterprises”), as guarantor, the lenders party thereto, and Citibank, N.A., as designated agent, which provides for advances to be made available to the Company in an aggregate principal amount of up to $5.25 billion (the “Credit Agreement”), and replaces the Company’s $5.25 billion 364-Day Credit Agreement, dated as of March 4, 2022. 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 Credit Agreement supports the Company’s commercial paper borrowings and is available for other general corporate purposes.
The Credit Agreement will expire on March 1, 2024. The Company has the option to extend the maturity date of all or a portion of advances outstanding at the time of maturity to February 28, 2025.
Borrowings under the Credit Agreement bear interest, at the Company’s election, at (a) (i) for Advances denominated in Dollars, Adjusted Term SOFR (which for an interest period of one month, Term SOFR for such interest period, and for an interest period of three or six months, Term SOFR for such interest period plus 0.10%), (ii) for Advances denominated in Euro, the EURIBO Rate, (iii) for Advances denominated in Yen, the TIBO Rate, and (iv) for Advances denominated in Sterling, Daily Simple SONIA, plus, in each case, an interest rate spread based on the Company’s public debt rating that ranges between 0.625% and 1.000% and (b) for Base Rate Advances (denominated in Dollars), the Base Rate plus an interest rate spread of 0.000%. Capitalized terms used, but not defined in the immediately preceding sentence, have the meanings ascribed to each in the Credit Agreement. The Credit Agreement also provides a mechanism to replace the interest rate benchmark if the applicable benchmark is no longer available. Advances under the Credit Agreement may be voluntarily prepaid without penalty or premium, other than customary breakage costs related to prepayments of Term SOFR, EURIBOR or TIBOR borrowings.
The Credit Agreement, like the former facility, contains customary affirmative and negative covenants for a facility of this type, including, among others, covenants pertaining to the delivery of financial statements, notices of default and certain other information, payment of taxes, maintenance of existence, compliance with laws, and limitations on mergers. The Credit Agreement also requires the Company to maintain a minimum ratio of Consolidated EBITDA to Consolidated Interest Expense (as such term is defined in the respective Credit Agreement) of 3.00 to 1.00 as of the last day of each period of four consecutive fiscal quarters.
The Credit Agreement, as with the former facility, contains default provisions customary for a facility of this type, which are subject to customary grace periods and materiality thresholds, including, among others, defaults related to payment failures, failure to comply with covenants, material misrepresentations, defaults under other material indebtedness, bankruptcy and related events, material judgments and the failure of the guaranty to be in full force and effect (other than as permitted under the Credit Agreement). The Credit Agreement provides that if an event of default occurs under the Credit Agreement, then the lenders may, among other things, declare all amounts owing under the Credit Agreement immediately due and payable. The Credit Agreement, as with the former facility, specifically excludes certain entities, including certain entities related to Hong Kong Disneyland and Shanghai Disney Resort, from any representations, covenants or events of default.
The foregoing description of the Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Credit Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.