含羞草传媒

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(7) Debt

Debt is summarized as follows:

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Exchangeable Senior Debentures

Each $1,000 debenture of Liberty Interactive LLC鈥檚 (鈥淟I LLC鈥�) 4% Exchangeable Senior Debentures was exchangeable at the holder's option for the value of 3.2265 shares of Sprint Corporation (鈥淪print鈥�) common stock and 0.7860 shares of Lumen Technologies, Inc. (鈥淟umen Technologies鈥�) (formerly known as CenturyLink, Inc.) common stock. 听 On April 1, 2020, T-Mobile US, Inc. (鈥淭-Mobile鈥�) completed its acquisition of Sprint Corporation (鈥淭MUS/S Acquisition鈥�) for听0.10256听shares of T-Mobile for every share of Sprint Corporation. Following the TMUS/S Acquisition, the reference shares attributable to each $1,000听original principal amount of the听4.0% Senior Exchangeable Debentures due 2029 consist of听0.3309听shares of common stock of T-Mobile, and听0.7860听shares of common stock of Lumen Technologies. LI LLC may, at its election, pay the exchange value in cash, Sprint and Lumen Technologies common stock or a combination thereof. 听LI LLC, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the face amount of the debentures plus accrued interest. 听As a result of various principal payments made to holders of

the 4% Exchangeable Senior Debentures, the adjusted principal amount of each $1,000 debenture is $917 as of December听31, 2020.

Each $1,000 debenture of LI LLC's 3.75% Exchangeable Senior Debentures was exchangeable at the holder's option for the value of 2.3578 shares of Sprint common stock and 0.5746 shares of Lumen Technologies common stock. 听Following the TMUS/S Acquisition, each $1,000 debenture of LI LLC鈥檚 3.75% Exchangeable Senior Debentures is exchangeable at the holder鈥檚 option for the value of 0.2419 shares of T-Mobile common stock and 0.5746 shares of Lumen Technologies common stock. 听LI LLC may, at its election, pay the exchange value in cash, Sprint and Lumen Technologies common stock or a combination thereof. 听含羞草传媒, at its option, may redeem the debentures, in whole or in part, for cash equal to the face amount of the debentures plus accrued interest. 听As a result of various principal payments made to holders of the 3.75% Exchangeable Senior Debentures, the adjusted principal amount of each $1,000 debenture is $940 as of December听31, 2020.

In August 2016, 含羞草传媒 issued $750 million principal amount of new senior exchangeable debentures due September 2046 which bear interest at an annual rate of 1.75%. Each $1,000 debenture is exchangeable at the holder鈥檚 option for the value of 2.9317 shares of Charter Class A common stock. 含羞草传媒 may, at its election, pay the exchange value in cash, Charter Class A common stock or a combination thereof. The number of shares of Charter Class A common stock attributable to a debenture represents an initial exchange price of approximately $341.10 per share. On October 5, 2023, 含羞草传媒, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the face amount of the debentures plus accrued interest. See note 5 for additional information about these debentures.

As part of a common control transaction with QVC completed in December 2020, QVC Global Corporate Holdings, LLC (鈥淨VC Global鈥�), a subsidiary of QVC, became the primary co-obligor of LI LLC鈥檚 3.5% Exchangeable Senior Debentures (the 鈥淢otorola Exchangeables鈥�), allowing the Motorola Exchangeables to be serviced direct by cash generated from QVC鈥檚 foreign operations. Concurrently, LI LLC issued a promissory note to QVC Global with an initial face amount of $1.8 billion, a stated annual interest rate of 0.48% and a maturity of December 29, 2029. Interest on the promissory note is to be paid annually beginning on December 29, 2021. 听Each $1,000 debenture of the Motorola Exchangeables is exchangeable at the holder's option for the value of 5.2598 shares of Motorola Solutions, Inc. (鈥淢SI鈥�). The remaining exchange value is payable, at QVC Global's option, in cash or MSI stock or a combination thereof. 听QVC Global, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the adjusted principal amount of the debentures plus accrued interest. 听As a result of various principal payments made to holders of the Motorola Exchangeables, the adjusted principal amount of each $1,000 debenture is $497 as of December听31, 2020. 听During the years ended December 31, 2020 and 2019, holders exchanged, under the terms of the Motorola Exchangeables, principal amounts of approximately $25 million and $58 million, respectively, and 含羞草传媒 made cash payments of approximately $49 million and $99 million, respectively, to settle the obligations.

含羞草传媒 has elected to account for all of its exchangeables 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. 听含羞草传媒 will review the triggering events on a quarterly basis to determine whether a triggering event has occurred to require current classification of certain exchangeables, see additional discussion below. 听

含羞草传媒 has sold, split-off or otherwise disposed of all of its shares of MSI, T-Mobile, Charter and Lumen Technologies common stock which underlie the respective exchangeable senior debentures. Because such exchangeable debentures are exchangeable at the option of the holder at any time and 含羞草传媒 can no longer use owned shares to redeem the debentures, 含羞草传媒 has classified for financial reporting purposes the debentures that could be redeemed for cash as a current liability. Exchangeable senior debentures classified as current totaled $1,750 million at December听31, 2020. 听Although such amount has been classified as a current liability for financial reporting purposes, the Company

believes the probability that the holders of such instruments will exchange a significant principal amount of the debentures prior to maturity is unlikely.

Interest on the Company's exchangeable debentures is payable semi-annually based on the date of issuance. 听At maturity, all of the Company's exchangeable debentures are payable in cash.

Senior Debentures

Interest on the 8.5% Senior Debentures due 2029 and the 8.25% Senior Debentures due 2030 (collectively, the 鈥淪enior Debentures鈥�) is payable semi-annually based on the date of issuance. The Senior Debentures are stated net of 听aggregate unamortized discount and issuance costs of $5 million at December 31, 2020 and $4 million at December 31, 2019. 听Such discount and issuance costs are being amortized to interest expense in the accompanying consolidated statements of operations.

QVC Senior Secured Notes

On August 21, 2014, QVC issued $600 million principal amount of 4.45% Senior Secured Notes due 2025 at an issue price of 99.860% and $400 million principal amount 5.45% Senior Secured Notes due 2034 at an issue price of 99.784% (collectively, the 鈥淎ugust Notes鈥�). The August Notes are secured by the capital stock of QVC and certain of QVC鈥檚 subsidiaries and have equal priority to QVC鈥檚 senior secured credit facility. During prior years, QVC issued $500 million principal amount of 5.125% Senior Secured Notes due 2022 at par, $750 million principal amount of 4.375% Senior Secured Notes due 2023 at par and $300 million principal amount of 5.95% Senior Secured Notes due 2043 at par.

In September 2018, QVC completed a registered debt offering for $225 million of 6.375% Senior Notes due 2067 (the 鈥�2067 Notes鈥�). QVC has the option to call the 2067 Notes after 5 years at par value, plus accrued and unpaid interest.

On November 26, 2019, QVC completed a registered debt offering for $435 million of the 6.25% Senior Secured Notes due 2068 (鈥�2068 Notes鈥�) at par. QVC granted an option for underwriters to purchase up to an additional $65 million of 2068 Notes which was exercised on December 6, 2019, bringing the aggregate principal borrowed to $500 million. QVC has the option to call the 2068 Notes after 5 years at par value, plus accrued and unpaid interest.

On February 4, 2020, QVC completed a registered debt offering for $575 million of the 4.75% Senior Secured Notes due 2027 (the "2027 Notes鈥�) at par. Interest on the 2027 Notes is paid semi-annually in February and August, with payments commencing on August 15, 2020. The proceeds were used to partially prepay existing indebtedness under QVC's bank credit facilities.

On August 20, 2020, QVC completed a registered debt offering for $500听million of the听4.375% Senior Secured Notes due 2028 (the "2028 Notes") at par. Interest on the 2028 Notes will be paid semi-annually in March and September, with payments commencing on March 1, 2021. The proceeds were used in a cash tender offer (the 鈥淭ender Offer鈥�) to purchase the outstanding $500听million of听5.125% Senior Secured Notes due 2022 (the 鈥�2022 Notes鈥�). QVC also issued a notice of redemption exercising its right to optionally redeem any of the 2022 Notes that remained outstanding following the Tender Offer. As a result of the Tender Offer and the redemption, the Company recorded a loss on extinguishment of debt in the consolidated statements of operations of $42听million for the year ended December 31, 2020.

QVC Bank Credit Facilities

On December 31, 2018, QVC entered into the Fourth Amended and Restated Credit Agreement with Zulily as co-borrowers (collectively, the 鈥淏orrowers鈥�) which is a multi-currency facility that provides for a $2.95 billion revolving credit facility, with a $450 million sub-limit for standby letters of credit and $1.5 billion of uncommitted incremental revolving loan commitments or incremental term loans. The Fourth Amended and Restated Credit Agreement includes a $400 million tranche that may be borrowed by QVC or Zulily, with a $50 million sub-limit for standby letters of credit. The remaining $2.55 billion and any incremental loans may be borrowed only by QVC. Borrowings that are alternate base rate loans will bear interest at a per annum rate equal to the base rate plus a margin that varies between 0.25% to 0.75% depending on the Borrowers鈥� combined ratio of consolidated total debt to consolidated EBITDA (the 鈥淐ombined Consolidated Leverage Ratio鈥�). Borrowings that are LIBOR loans will bear interest at a per annum rate equal to the applicable LIBOR plus a margin that varies between 1.25% and 1.75% depending on the Borrowers鈥� Combined Consolidated Leverage Ratio. Each loan may be prepaid at any time and from time to time without penalty other than customary breakage costs. No mandatory prepayments will be required other than when borrowings and letter of credit usage exceed availability; provided that, if Zulily ceases to be controlled by 含羞草传媒, all of its loans must be repaid and its letters of credit cash collateralized. The facility matures on December 31, 2023. Payment of loans may be accelerated following certain customary events of default.

The payment and performance of the borrowers鈥� obligations (including Zulily鈥檚 obligations) under the Fourth Amended and Restated Credit Agreement are guaranteed by each of QVC鈥檚 Material Domestic Subsidiaries (as defined in the Fourth Amended and Restated Credit Agreement). Further, the borrowings under the Fourth Amended and Restated Credit Agreement are secured, pari passu with QVC鈥檚 existing notes, by a pledge of all of QVC鈥檚 equity interests. In addition, the payment and performance of the borrowers鈥� obligations with respect to the $400 million tranche available to both QVC and Zulily are also guaranteed by Zulily and secured by a pledge of all of Zulily鈥檚 equity interests.

The Fourth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on QVC and Zulily and each of their respective 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鈥檚 consolidated leverage ratio and the Borrowers鈥� Combined Consolidated Leverage Ratio.

Availability under the Fourth Amended and Restated Credit Agreement at December 31, 2020 was $2.93 billion, including the remaining portion of the $400 million tranche available to Zulily and net of $23 million of outstanding standby letters of credit.

Interest Rate Swap Arrangements

During the year ended December 31, 2016, QVC entered into a three-year interest rate swap arrangement with a notional amount of $125 million to mitigate the interest rate risk associated with interest payments related to its variable rate debt. The swap arrangement did not qualify as a cash flow hedge under GAAP, and expired in June 2019. In July 2019, QVC entered into a three-year interest swap arrangement with a notional amount of $125 million. The swap arrangement did not qualify as a cash flow hedge under U.S. GAAP and the fair value of the swap instrument was in a net liability position of $3 million and less than $1 million as of December 31, 2020 and 2019, respectively. On December 31, 2018, QVC entered into a thirteen month interest rate swap arrangement that effectively converted $250 million of its variable rate bank credit facility to a fixed rate of 1.05% which expired in January 2020.

Debt Covenants

含羞草传媒 and its subsidiaries were in compliance with all debt covenants at December 31, 2020.

Five Year Maturities

The annual principal maturities of 含羞草传媒's debt, based on stated maturity dates, for each of the next five years is as follows (amounts in millions):

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Fair Value of Debt

含羞草传媒 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 含羞草传媒 for debt of the same remaining maturities (Level 2). The听2067 Notes and 2068 Notes are traded on the New York Stock Exchange, and the Company considers them to be actively traded. As such, the 2067 Notes and 2068 Notes are valued based on their trading price (Level 1). The fair value, based on quoted prices of instruments not considered to be active markets, of 含羞草传媒's publicly traded debt securities that are not reported at fair value in the accompanying consolidated balance sheets is as follows (amounts in听millions):

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Due to the variable rate nature, 含羞草传媒 believes that the carrying amount of its subsidiary debt not discussed above approximated fair value at December听31, 2020.