Item 1.01.
Entry into a Material Definitive Agreement.
On August 24, 2018, Activision Blizzard, Inc. (the
Company
) entered into the Seventh Amendment (the
Amendment
) to the Credit Agreement, dated as of
October 11, 2013
(as amended by the First Amendment, dated as of November 2, 2015, the Second Amendment, dated as of November 13, 2015, the Third Amendment, dated as of December 14, 2015, the Fourth Amendment, dated as of March 31, 2016, the Fifth Amendment, dated as of August 23, 2016, and the Sixth Amendment, dated as of February 3, 2017, the
Existing Credit Agreement
, and as amended and restated by the Amendment, the
Credit Agreement
), among the Company, as borrower, the guarantors from time to time party thereto, the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and collateral agent for the lenders, and the several other agents party thereto.
The Amendment, among other things: (i) provides for a new tranche of revolving credit commitments in an aggregate principal amount of $1,500,000,000 (the
Revolving Credit Facility
); (ii) amends the Credit Agreement to remove mechanics related to the former term loan facility, which was repaid in full immediately prior to the effectiveness of the Amendment; and (iii) eliminates and amends certain representations, warranties and covenants to reflect the Companys investment grade credit ratings. The Revolving Credit Facility replaced the Companys Revolving Credit Facility under, and as defined in, the Existing Credit Agreement (the
Existing Revolver
) in its entirety. Any proceeds under the Revolving Credit Facility will be used for general corporate purposes and working capital needs.
The Revolving Credit Facility is scheduled to mature on August
24, 2023. Borrowings under the Revolving Credit Facility will bear interest, at the Companys option, at either (a) a base rate equal to the highest of (i) the federal funds rate, plus 1/2 of 1%, (ii) the prime commercial lending rate of Bank of America, N.A. and (iii) the London Interbank Offered Rate (
LIBOR
) for an interest period of one month beginning on such day plus 1.00%, or (b) LIBOR, in each case, plus an applicable interest margin. LIBOR will be subject to a floor of 0% and base rate will be subject to an effective floor of 1.00%. The applicable interest margin for borrowings under the Revolving Credit Facility will range from 0.875% to 1.375% for LIBOR borrowings and from 0.000% to 0.375% for base rate borrowings and will be determined by reference to a pricing grid based on the Companys Corporate Rating (as defined in the Credit Agreement).
Under the Credit Agreement, the Company is subject to a financial covenant (the
Financial Covenant
) requiring the Companys Consolidated Total Net Debt Ratio (as defined in the Credit Agreement) not to exceed on or prior to the last day of the first full fiscal quarter after the date of the Amendment, 3.75:1.00 (or, at the Companys option and for a limited period of time upon the consummation of a Qualifying Acquisition (as defined in the Credit Agreement), 4.25:1.00). The Credit Agreement contains covenants customary for transactions of this type for issuers with similar credit ratings including those restricting liens, debt of non-guarantor subsidiaries and certain fundamental changes, in each case with exceptions, including exceptions for secured debt and debt of non-guarantor subsidiaries of the Company in each case up to an amount not exceeding 7.5% of Total Assets (as defined in the Credit Agreement)
.
A copy of the Amendment is attached as Exhibit 10.1 hereto and incorporated herein by reference. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of such Amendment.