Item 2.01 Completion of Acquisition or Disposition of Assets
On June 21, 2016, pursuant to the Agreement and Plan of Merger (the “
Merger Agreement
”), dated as of September 16, 2015, by and among Cablevision Systems Corporation, a Delaware corporation (“
Cablevision
”), Altice N.V., a Dutch public company with limited liability (
naamloze vennootschap
) (“
Altice
”), and Neptune Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of Altice (“
Merger Sub
”), Merger Sub merged with and into Cablevision, with Cablevision surviving the merger (the “
Merger
”).
In connection with the Merger, each outstanding share of the Cablevision NY Group Class A common stock, par value $0.01 per share (“
Class A Shares
”), and Cablevision NY Group Class B common stock, par value $0.01 per share (“
Class B Shares
”, and together with the Class A Shares, the “
Shares
”), other than Shares owned by Cablevision, Altice or any of their respective wholly-owned subsidiaries, in each case not held on behalf of third parties in a fiduciary capacity, will be converted into the right to receive $34.90 in cash, without interest (the “
Merger Consideration
”).
Pursuant to an agreement, dated December 21, 2015, by and among CVC 2 B.V., CIE Management IX Limited, for and on behalf of the limited partnerships BC European Capital IX-1 through 11 (“
BCP
”) and Canada Pension Plan Investment Board (“
CPPIB
”), certain affiliates of BCP and CPPIB have funded approximately $1 billion toward the payment of the aggregate Per Share Merger Consideration (as defined in the Merger Agreement), and indirectly acquired approximately 30% of the Shares of Cablevision.
The foregoing summary of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is incorporated herein by reference. A copy of the Merger Agreement is filed herewith as Exhibit 2.1.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
In connection with the Merger, Neptune Finco Corp (the “
Initial Issuer
”), a Delaware corporation and indirect subsidiary of Altice, (x) issued (i) $1,800 million principal amount of senior notes due 2023 (the “
New 2023 Notes
”), (ii) $2,000 million principal amount of senior notes due 2025 (the “
New 2025 Notes
”, together with the New 2023 Notes, the “
New Senior Notes
”) and (iii) $1,000 million senior guaranteed notes due 2025 (the “
New Guaranteed Notes
”, together with the New Senior Notes, the “
New Notes
”) in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, and (y) entered into a credit agreement dated as of October 9, 2015, between the Initial Issuer, certain lenders party thereto and JPMorgan Chase Bank, N.A. (the “
Agent
”), as administrative agent and security agent (the “
New Credit Facilities Agreement
”). The New Senior Notes were issued pursuant to an indenture dated as of October 9, 2015, between the Initial Issuer and Deutsche Bank Trust Company Americas, as trustee, paying agent, transfer agent and registrar (the “
New Senior Notes Indenture
”). The New Guaranteed Notes were issued pursuant to an indenture dated as of October 9, 2015, between the Initial Issuer and Deutsche Bank Trust Company Americas, as trustee, paying agent, transfer agent and registrar (the “
New Guaranteed Notes Indenture
”, together with the New Senior Notes Indenture, the “
New Indentures
”).
On June 21, 2016, immediately following the Merger, the Initial Issuer merged with and into CSC Holdings, LLC (“
CSC Holdings
”), with CSC Holdings surviving the merger (the “
CSC Holdings Merger
”), and the New Notes and the New Credit Facilities (as defined below) became obligations of CSC Holdings. In connection with the Merger and the CSC Holdings Merger, on June 21, 2016, (i) CSC Holdings entered into a supplemental indenture to the New Senior Notes Indenture (the “
New Senior Notes Supplemental Indenture
”), (ii) CSC Holdings and the Initial Guarantors (as defined below) entered into a supplemental indenture to the New Guaranteed Notes Indenture (the “
New Guaranteed Notes Supplemental Indenture
”), and (iii) the Initial Guarantors entered into a facility guarantee relating to the New Credit Facilities Agreement (the “
Facility Guarantee
”).
New Notes
The New 2023 Notes bear interest at a rate of 10.125% per annum and mature on January 15, 2023. The New 2025 Notes bear interest at a rate of 10.875% per annum and mature on October 15, 2025. The New Guaranteed Notes bear interest at a rate of 6.625% per annum and mature on October 15, 2025. Interest on the New Notes will be payable semi-annually in arrears on January 15 and July 15 of each year.
The New Senior Notes (i) are the general unsecured obligations of CSC Holdings, (ii) rank equally in right of payment with all of CSC Holdings’ existing and future senior indebtedness, (iii) rank senior in right of payment to all of CSC Holdings’ existing and future subordinated indebtedness, (iv) are structurally senior to the existing and future senior indebtedness of Cablevision, (v) are effectively subordinated to any of CSC Holdings’ existing and future secured indebtedness, including indebtedness under the New Credit Facilities, to the extent of the value of the collateral securing such indebtedness, and (vi) are structurally subordinated to existing and future liabilities of all of CSC Holdings’ subsidiaries.
The New Guaranteed Notes (i) are the general unsecured obligations of CSC Holdings, (ii) rank equally in right of payment with all of CSC Holdings’ existing and future senior indebtedness, (iii) rank senior in right of payment to all of CSC Holdings’ existing and future subordinated indebtedness, (iv) are structurally senior to the existing and future senior indebtedness of Cablevision, (v) are effectively subordinated to any of CSC Holdings’ existing and future secured indebtedness, including indebtedness under the New Credit Facilities, to the extent of the value of the collateral securing such indebtedness, and (vi) are structurally subordinated to existing and future liabilities of CSC Holdings’ subsidiaries that do not guarantee the New Guaranteed Notes. The New Guaranteed Notes are guaranteed by each restricted subsidiary of CSC Holdings (other than CSC TKR, LLC and its subsidiaries and certain excluded subsidiaries) (the “
Initial Guarantors
”). In addition, subject to certain limitations, the New Guaranteed Notes will also be guaranteed by each future material wholly-owned restricted subsidiary of CSC Holdings.
CSC Holdings may redeem some or all of the New 2023 Notes at any time on or after January 15, 2019, and some or all of the New 2025 Notes and New Guaranteed Notes at any time on or after October 15, 2020, at the redemption prices set forth in the relevant New Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. CSC Holdings may also redeem up to 40% of each series of the New Notes using the proceeds of certain equity offerings before October 15, 2018, at a redemption price equal to 110.125% for the New 2023 Notes, 110.875% for the New 2025 Notes and 106.625% for the New Guaranteed Notes, in each case plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to January 15, 2019, CSC Holdings may redeem some or all of the New 2023 Notes, and at any time prior to October 15, 2020, CSC Holdings may redeem some or all of the New 2025 Notes and the New Guaranteed Notes, at a price equal to 100% of the principal amount thereof, plus a “make whole” premium specified in the relevant New Indenture plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.
The New Indentures contain certain covenants and agreements, including limitations on the ability of CSC Holdings and its restricted subsidiaries to (i) incur or guarantee additional indebtedness, (ii) make investments or other restricted payments, (iii) create liens, (iv) sell assets and subsidiary stock, (v) pay dividends or make other distributions or repurchase or redeem our capital stock or subordinated debt, (vi) engage in certain transactions with affiliates, (vii) enter into agreements that restrict the payment of dividends by subsidiaries or the repayment of intercompany loans and advances, and (viii) engage in mergers or consolidations, in each case subject to certain exceptions. The New Indentures also contain certain customary events of default. If an event of default occurs, the obligations under the New Notes and the New Indentures may be accelerated.
New Credit Facilities
The New Credit Facilities Agreement provides U.S. dollar term loans in an aggregate principal amount not to exceed $3,800 million (the “
New Term Credit Facility
”) and U.S. dollar revolving loan commitments in an aggregate principal amount not to exceed $2,000 million (the “
New Revolving Credit Facility
,” and together with the New Term Credit Facility, the “
New Credit Facilities
”). The New Credit Facilities Agreement will also permit CSC Holdings to request revolving loans, swing line loans or letters of credit from the revolving lenders, swingline lenders or issuing banks, as applicable, thereunder, from time to time prior to October 9, 2020, unless the commitments under the New Revolving Credit Facility have been previously terminated. Capitalized terms used under this heading “
New Credit Facilities
” and not otherwise defined herein shall have the meanings given to them in the New Credit Facilities Agreement.
Interest Rates
Loans comprising each Eurodollar Borrowing or ABR Borrowing, as applicable, shall bear interest at a rate
per annum
equal to the Adjusted LIBO Rate or the Alternate Base Rate, as applicable, plus the Applicable Margin, where the Applicable Margin means:
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in respect of Initial Term Loans (i) with respect to any ABR Loan, 3.00% per annum and (ii) with respect to any Eurodollar Loan, 4.00% per annum, and
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in respect of Initial Revolving Credit Loans (i) with respect to any ABR Loan, 2.25% per annum and (ii) with respect to any Eurodollar Loan, 3.25% per annum.
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Mandatory Prepayments
The New Credit Facilities Agreement will require CSC Holdings to prepay outstanding term loans, subject to certain exceptions and deductions, with (i) 100% of the net cash proceeds of certain asset sales, subject to reinvestment rights and certain other exceptions, and (ii) commencing with the first full fiscal year after the consummation of the Merger, a pari ratable share (based on the outstanding principal amount of the New Term Credit Facility divided by the sum of the outstanding principal amount of all pari passu indebtedness and the New Term Credit Facility) of 50% of the annual excess cash flow of CSC Holdings and its restricted subsidiaries, which will be reduced to 0% if the Consolidated Net Senior Secured Leverage Ratio of CSC Holdings is less than or equal to 4.5 to 1.
Amortization and Final Maturity
Beginning with the first full fiscal quarter of CSC Holdings after the consummation of the Merger, CSC Holdings will be required to make scheduled quarterly payments each equal to 0.25% of the original principal amount of the term loans borrowed under the New Credit Facilities, with the balance due on October 9, 2022.
Guarantees; Security
The obligations of CSC Holdings under the New Credit Facilities are guaranteed by each Initial Guarantor and, subject to certain limitations, will be guaranteed by each future material wholly-owned restricted subsidiary of CSC Holdings. The obligations under the New Credit Facilities (including any guarantees thereof) will be secured on a first priority basis, subject to any liens permitted by the New Credit Facilities, by capital stock held by CSC Holdings or any guarantor in certain subsidiaries of CSC Holdings, subject to certain exclusions and limitations as agreed with the Agent, pursuant to a pledge agreement dated as of June 21, 2016 among CSC Holdings and certain subsidiaries of CSC Holdings as pledgors and JPMorgan Chase Bank N.A. as the secured party (the “
Pledge Agreement
”).
Certain Covenants and Events of Default
The New Credit Facilities Agreement includes negative covenants that are substantially similar to the negative covenants contained in the New Indentures. The New Credit Facilities Agreement includes one financial maintenance covenant (solely for the benefit of the New Revolving Credit Facility), consisting of a maximum Consolidated Net Senior Secured Leverage Ratio of 5.0 to 1, which will be tested on the last day of any fiscal quarter (commencing with the last day of the first full fiscal quarter ended after the consummation of the Merger) but only if on such day there are outstanding borrowings under the New Revolving Credit Facility (including swingline loans but excluding any cash collateralized letters of credit and undrawn letters of credit not to exceed $15 million). The New Credit Facilities Agreement also contains certain customary representations and warranties, affirmative covenants and events of default (including, among others, an event of default upon a change of control). If an event of default occurs, the obligations under the New Credit Facilities may be accelerated.
The foregoing summary of the New Indentures, the New Guaranteed Notes Supplemental Indenture, the New Senior Notes Supplemental Indenture, New Credit Facilities Agreement, the Facility Guarantee and the Pledge Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements which are filed as Exhibits 4.1 through 4.4 and 10.1 through 10.3, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
On June 21, 2016, in connection with the Merger, CSC Holdings repaid all of its outstanding indebtedness under the credit agreement dated as of April 17, 2013, between CSC Holdings, certain lenders party thereto and Bank of America, N.A., as administrative agent and security agent and Newsday LLC repaid all of its outstanding indebtedness under the credit agreement dated as of October 12, 2012 among Newsday LLC, CSC Holdings, certain lenders party thereto and Barclays Bank PLC, as administrative agent and security agent.