Borrowings

12 Months Ended

Jun. 30, 2019

NOTE 9. BORROWINGS

The Company’s total borrowings consist of the following:


	Interest rate at June 30, 2019			Due date at June 30, 2019		As of June 30, 2019			As of June 30, 2018
						(in millions)
Foxtel Group
Credit facility 2013 (a)(b)		—			Apr 7, 2019	$	—		$	222
Credit facility 2014—tranche 1 (a)(b)		—			May 30, 2019		—			148
Credit facility 2014—tranche 2 (a)		3.07	%		Jan 31, 2020		56			148
Credit facility 2015 (a)		3.32	%		Jul 31, 2020		281			296
Credit facility 2016 (a)(c)		3.81	%		Sept 11, 2021		193			108
Working capital facility 2017 (a)(c)		3.47	%		Jul 3, 2020		56			59
US private placement 2009—tranche 3		6.20	%		Sept 24, 2019		75			75
US private placement 2012—USD portion—tranche 1 (d)		3.68	%		Jul 25, 2019		150			150
US private placement 2012—USD portion—tranche 2 (d)		4.27	%		Jul 25, 2022		199			196
US private placement 2012—USD portion—tranche 3 (d)		4.42	%		Jul 25, 2024		149			146
US private placement 2012—AUD portion		7.04	%		Jul 25, 2022		77			83
REA Group
Credit facility 2016—tranche 2 (e)(f)		—			Dec 31, 2018		—			89
Credit facility 2016—tranche 3 (e)(f)		2.97	%		Dec 31, 2019		168			178
Credit facility 2018 (e)(f)		2.73	%		Apr 27, 2021		49			54

Total borrowings							1,453			1,952
Less: current portion (g)							(449	)		(462	)

Long-term borrowings						$	1,004		$	1,490

(a)	Borrowings under these facilities bear interest at a floating rate of Australian BBSY plus an applicable margin of between 1.20% and 2.70% per annum payable quarterly.

(b)	During the fiscal year ended June 30, 2019, the Foxtel Debt Group repaid its A$300 million (approximately $216 million) facility maturing in April 2019 and its A$200 million (approximately $139 million) facility maturing in May 2019 using A$500 million of shareholder loans provided by the Company.

(c)	As of June 30, 2019, the Foxtel Debt Group has undrawn commitments of $181 million under these facilities for which it pays a commitment fee in the range of 40% and 45% of the applicable margin.

(d)	The carrying values of the borrowings include any fair value adjustments related to the Company’s fair value hedges. See Note 11—Financial Instruments and Fair Value Measurements.

(e)	Borrowings under these facilities bear interest at a floating rate of the Australian BBSY plus a margin in the range of 0.85% and 1.45% depending on REA Group’s net leverage ratio. As of June 30, 2019, REA Group was paying a margin of between 0.85% and 1.05%.

(f)	During the fiscal year ended June 30, 2019, REA Group repaid $87 million (A$120 million) for its unsecured loan facility due December 2018. REA Group had remaining borrowings of $217 million, of which approximately $168 million (A$240 million) will mature in fiscal 2020.

(g)	The Company classifies the current portion of long term debt as non-current liabilities on the Balance Sheets when it has the intent and ability to refinance the obligation on a long-term basis, in accordance with ASC 470-50 “Debt.”

Foxtel Group Borrowings

As of June 30, 2019, the Company’s borrowings reflect $1.24 billion of outstanding debt incurred by certain subsidiaries of Foxtel (together with Foxtel, the “Foxtel Debt Group”) that the Company consolidated upon completion of the Transaction. The Foxtel Debt Group indebtedness includes U.S. private placement senior unsecured notes and drawn amounts under its revolving credit facilities, with maturities ranging from fiscal 2020 to 2025. In accordance with ASC 805, these debt instruments were recorded at fair value as of the Transaction completion date.

During fiscal 2019, the Foxtel Debt Group had repayments of $1.03 billion, including the repayment of its A$300 million (approximately $216 million) facility maturing in April 2019 and the repayment of its A$200 million (approximately $139 million) facility maturing in May 2019, and borrowings of $681 million. The repayments of the A$300 million facility maturing in April 2019 and the A$200 million facility maturing in May 2019 were repaid using A$500 million of shareholder loans provided by the Company. The shareholder loans bear interest at a variable rate of Australian BBSY plus an applicable margin ranging from 6.30% to 7.75%. The shareholder loans mature in December 2027.

Covenants, Collateral and Unamortized borrowing costs

The Foxtel Debt Group’s external borrowings (revolving credit facilities and U.S. private placement senior unsecured notes) require the Foxtel Debt Group to comply with specified financial and non-financial covenants calculated in accordance with Australian International Financial Reporting Standards. Subject to certain exceptions, these covenants restrict or prohibit members of the Foxtel Debt Group from, among other things, undertaking certain transactions, disposing of properties or assets (including subsidiary stock), merging or consolidating with any other person, making financial accommodation available, giving guarantees, entering into certain other financing arrangements, creating or permitting certain liens, engaging in transactions with affiliates, making repayments of other loans and undergoing fundamental business changes. The financial covenants require the Foxtel Debt Group to maintain a total debt to Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”) ratio of not more than 3.75 to 1.0 and an interest coverage ratio of no less than 3.50 to 1.0. The Foxtel Debt Group’s external borrowings are only guaranteed by certain members of the Foxtel Debt Group. The Foxtel Debt Group was in compliance with these covenants as of June 30, 2019. There were no assets pledged as collateral for any of the borrowings.

REA Group Facilities

During fiscal 2019, REA Group repaid approximately $87 million (A$120 million) for the second tranche of its A$480 million unsecured revolving loan facility, which matured in December 2018. REA Group had remaining borrowings of $217 million, of which approximately $168 million (A$240 million) will mature in December 2019.

The facilities require REA Group to maintain a net leverage ratio of not more than 3.25 to 1.0 and an interest coverage ratio of not less than 3.0 to 1.0. As of June 30, 2019, REA Group was in compliance with all of the applicable debt covenants.

Revolving Credit Facility

The Company’s Credit Agreement (as amended, the “Credit Agreement”) provides for an unsecured $650 million revolving credit facility (the “Facility”) that can be used for general corporate purposes. The Facility has a sublimit of $100 million available for issuances of letters of credit. Under the Credit Agreement, the Company may request increases in the amount of the Facility up to a maximum amount of $900 million. The lenders’ commitments under the Credit Agreement terminate on October 23, 2020 provided the Company may request that the commitments be extended under certain circumstances as set forth in the Credit Agreement for up to two additional

one-year

periods.

The Credit Agreement contains customary affirmative and negative covenants and events of default, with customary exceptions, including limitations on the ability of the Company and its subsidiaries to engage in transactions with affiliates, incur liens, merge into or consolidate with any other entity, incur subsidiary debt or dispose of all or substantially all of its assets or all or substantially all of the stock of its subsidiaries. In addition, the Credit Agreement requires the Company to maintain an adjusted operating income leverage ratio of not more than 3.0 to 1.0 and an interest coverage ratio of not less than 3.0 to 1.0. As of June 30, 2019, the Company was in compliance with all of the applicable debt covenants.

Interest on borrowings under the Facility is based on either (a) a Eurodollar Rate formula or (b) the Base Rate formula, each as set forth in the Credit Agreement. The applicable margin and the commitment fee are based on the pricing grid in the Credit Agreement, which varies based on the Company’s adjusted operating income leverage ratio. As of June 30, 2019, the Company was paying a commitment fee of 0.25% on any undrawn balance and an applicable margin of 0.75% for a Base Rate borrowing and 1.75% for a Eurodollar Rate borrowing.

As of the date of this filing, the Company has not borrowed any funds under the Facility.

Future maturities

The following table summarizes the Company’s debt maturities as of June 30, 2019:


	As of June 30, 2019
	(in millions)
Fiscal 2020	$	449
Fiscal 2021		386
Fiscal 2022		193
Fiscal 2023		276
Fiscal 2024		—
Thereafter		149